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?

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

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

   • $120,000
   • $1.08 million
   • $1.32 million
   • $1.2 million
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 $4 million
   • About $0.8 million
   • About $0.4 million
   • About $1.2 million
5. 4.

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

   • Proposal 3, because the fee is charged to owners and not to renters
   • No proposal, because the three raise the same $1.2 million
   • Proposal 1, because the property tax falls on owners of property
   • Proposal 2, because owners pay the sales tax in town on what they buy
6. 5.

   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 2, because visitors buy about a third of taxable goods
   • Proposal 1, because visitors own much of the property in town
   • No proposal, because the cost falls on residents even when visitors shop
7. 6.

   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: card C says taxable sales rise whenever there is a recession
   • Weak: card C says taxable sales fell about 10 percent in recessions
   • Strong: sales taxes raise the most money in town, so they are steady
8. 7.

   Which pair of statements best sums up proposals 2 and 3, Noah asks?

   • They are the same, because each raises the same amount for the town and costs the same
   • 2 shifts cost to visitors but can drop; 3 is steady but hits small incomes harder
   • 2 falls hardest on property owners, and 3 falls hardest on shoppers in town
   • 2 is steady but hits small incomes harder; 3 shifts cost to visitors but can drop
9. 8.

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

   • 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
   • Rates charged by other towns in the same state for the same taxes
10. 9.

    A home is assessed at $300,000. How much more property tax does proposal 1 add for it, Ren asks?

    • $3,600
    • $60
    • $4,200
    • $600
11. 10.

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

    • $0.4 million
    • $4.8 million
    • $0.48 million
    • $0.72 million