How could I make sure I knew the differences between each system? By analyzing some specific tax situations.

Read through the descriptions of each type of tax, then select the correct answers to the questions by clicking on them. If you want to change your answers, hit Clear. When you're satisfied with all your answers, hit Submit.

In 1998, many single taxpayers are allowed a personal "exemption" of $2,650, and a "standard deduction" of $4,150, so they can earn up to $6,800 without incurring a Federal income tax liability. Both the personal exemption and the standard deduction may increase in future years because of inflation.

1) If you increase the amount of income that's not subject to tax liability, are you making the income tax more or less progressive?
A. More progressive
B. Less progressive

The Federal Insurance Contributions Act (FICA) consists of both a Social Security (retirement) payroll tax and a Medicare (hospital insurance) tax. The tax is levied on employers, employees, and certain self-employed individuals.

In 1998, the employee's contribution to the retirement plan part of the FICA tax is 6.2% for the first $68,400 earned in wages and salaries. The employee's part of the Social Security payroll tax applies only to wages, salaries, and other personal income. (The Medicare part of the tax is 1.45% on all earned income.) People with income from interest and dividend payments do not have to pay any Social Security tax on this income.

2) Over the wage and salary range of $0 to $68,400, was the Social Security tax regressive, progressive, or proportional?
A. Regressive
B. Progressive
C. Proportional

3) If you made more than $68,400 in earned income, would you consider the Social Security tax regressive, progressive, or proportional?
A. Regressive
B. Progressive
C. Proportional

4) If you received a lot of money from interest and dividend payments, and didn't have to pay any Social Security tax on this money, would you consider the Social Security tax regressive, progressive, or proportional?
A. Regressive
B. Progressive
C. Proportional

A state has a 10 cents per gallon excise tax on gasoline.
* Driver A: Total income of $5,000, spends $50 on state gas tax -- 1.0% of income
* Driver B: Total income of $10,000, spends $75 on state gas tax -- .75% of income
* Driver C: Total income of $20,000, spends $100 on state gas tax -- .50% of income

5) Is the state gasoline tax regressive, progressive, or proportional?
A. Regressive
B. Progressive
C. Proportional

6) Do you think that excise taxes on such consumer products as automobile tires, tobacco products, distilled spirits, etc., is regressive, progressive, or proportional?
A. Regressive
B. Progressive
C. Proportional