Assessment Solutions: Direct and Indirect Taxes

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Assessment Solutions: Direct and Indirect Taxes

Assessment Solutions Theme 4: What Is Taxed and Why Lesson 4: Direct and Indirect Taxes Part 1 Match the descriptions to their correct key terms. Write the letters of the correct key terms on the lines provided. Answer Key: A. sales tax B. business C. individual D. direct E. indirect C 1. Personal income tax is paid by this type of income earner D 2. A tax which cannot be shifted B 3. To recover an increase in its taxes, this type of taxpayer may increase its prices to its customers E 4. A tax which can be passed on to another A 5. Stores often pass along the cost of this type of state and local tax Part 2 Indicate whether each of the statements below is True or False. Write true if the statement is true. Write false if the statement is false. Write your answers in the space provided. 1. A direct tax cannot be shifted to another. True 2. Individual income tax is an example of a direct tax. True 3. To recover business taxes, an owner cannot pass along the charges. False Understanding Taxes 1 4. Consumers often pay some or all business taxes when they purchase goods and services. True 5. Ultimately, only a business owner pays the cost of business property tax. False Part 3 Classify each tax below as either Direct or Indirect. Write the letter of the correct choice in the space provided. B 1. Sales tax A. direct tax B. indirect tax A 2. Personal income tax A. direct tax B. indirect tax A 3. Personal property tax A. direct tax B. indirect tax B 4. Business property tax A. direct tax B. indirect tax B 5. Payroll tax A. direct tax B. indirect tax Understanding Taxes 2 .

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