Taxes: kinds, who collects them and what they pay for

Grade 7 Social Studies Worksheet - Challenge Me

Circle the best answer.

1. Read this first

   Use this

   Closing a gap in Cedar Bend (an invented town; figures invented to show the idea). Card A, the town's numbers: it is short $1.2 million next year. Its property is assessed at $600 million, and the property tax rate is 1.2 percent. Shoppers buy $480 million of taxable goods a year, and the sales tax rate is 2 percent. The town has 24,000 households. Card B, three proposals that each raise $1.2 million: (1) raise the property tax rate by 0.2 percentage points; (2) raise the sales tax rate by 0.25 percentage points; (3) charge each household a $50 yearly fee. Card C, notes from the town finance office: about a third of taxable sales come from visitors who live elsewhere; in past recessions taxable sales fell by about 10 percent; household incomes in town run from $25,000 to $200,000 a year.

2. 1.

   At a 1.2 percent rate on $600 million of property, how much property tax does Cedar Bend collect now, Ari asks?

   • $9.6 million
   • $7.2 million
   • $1.2 million
   • $720,000
3. 2.

   In a recession taxable sales fall 10 percent. How much would proposal 2 then raise, Bo asks?

   • $1.32 million
   • $1.2 million
   • $1.08 million
   • $120,000
4. 3.

   About a third of taxable sales come from visitors. About how much of proposal 2's $1.2 million would visitors pay, Esme asks?

   • About $0.4 million
   • About $1.2 million
   • About $4 million
   • About $0.8 million
5. 4.

   Compare proposal 3's $50 fee with household incomes. What share of income is the fee for a $25,000 and a $200,000 household, Jun asks?

   • 0.025 percent of the $25,000 income and 0.2 percent of the $200,000 income
   • 0.2 percent for both households, because both pay the same $50
   • 0.2 percent of the $25,000 income and 0.025 percent of the $200,000 income
   • 2 percent of the $25,000 income and 0.25 percent of the $200,000 income
6. 5.

   Which proposal might owners of land and buildings oppose most, and why, Kira asks?

   • Proposal 2, because owners pay the sales tax in town on what they buy
   • No proposal, because the three raise the same $1.2 million
   • Proposal 3, because the fee is charged to owners and not to renters
   • Proposal 1, because the property tax falls on owners of property
7. 6.

   Which proposal would shift part of the cost to people who live outside Cedar Bend, Luz asks?

   • Proposal 3, because visitors count as households in the town
   • Proposal 1, because visitors own much of the property in town
   • Proposal 2, because visitors buy about a third of taxable goods
   • No proposal, because the cost falls on residents even when visitors shop
8. 7.

   A student says, "Proposal 2 is the steadiest, because sales tax money keeps coming in." How strong is that claim, Milo asks?

   • Weak: no tax money can be predicted from one year to the next year
   • Strong: sales taxes raise the most money in town, so they are steady
   • Strong: card C says taxable sales rise whenever there is a recession
   • Weak: card C says taxable sales fell about 10 percent in recessions
9. 8.

   What further information would help most in choosing between proposals 1 and 3, Pia asks?

   • Rates charged by other towns in the same state for the same taxes
   • How home values and household incomes are spread across the town
   • Nothing more, since the three proposals raise the same amount
   • How many visitors shop in town each year and what they buy
10. 9.

    The finance office finds visitors buy 40 percent of taxable goods, not a third. How much of proposal 2 would visitors pay, Tala asks?

    • $0.48 million
    • $0.72 million
    • $4.8 million
    • $0.4 million
11. 10.

    A student says, "The best proposal is the one that raises the most money." How strong is that claim, Zee asks?

    • Strong: raising the most money is how any tax should be judged by a town
    • Weak: all three raise the same, so the choice rests on who pays and how steady
    • Weak: raising money is not a goal of taxes, so it should not count
    • Strong: proposal 1 raises the most, because property in town is worth more than anything else