1. Which of the following taxes is the largest source of revenue for the US federal government?PERSONAL INCOME TAXCORPORATE INCOME TAXRETAIL SALES TAXPAYROLL TAX2. Which of the following taxes is the largest source of revenue for the State of Indiana’s government?INDIVIDUAL INCOME TAXRETAIL SALES TAXPROPERTY TAXCORPORATE INCOME TAX3. Which of the following best represents a tax?THE PAYMENT YOU MAKE FOR A COMPUTER ON AMAZON.THE PAYMENT YOU MAKE TO SEND A PACKAGE WITH THE US POST OFFICE.THE PAYMENT YOU MAKE TO THE GOVERNMENT FOR AN OCCUPATIONAL LICENSE.THE PAYMENT YOU MAKE TO THE GOVERNMENT FOR GALLON OF GASOLINE YOU PURCHASE.4. To compute tax revenue due from an individual or business entity, please describe in 2 or 3 sentences the two basic components that are necessary?5. The statutory marginal tax rate tells us the change in a taxpayer’s tax liability if that taxpayer’s income increases by $1.TRUEFALSESuppose a taxpayer has taxable income of $100 and faces a marginal tax rate of 20%. Use this info to answer questions 6 and 7.6. What is the taxpayer’s tax liability?Your response should be formatted as follows: $x so 10 dollars would be formatted as $107. What is the taxpayer’s average tax rate?Your response should be formatted as follows: x% so 10 percent would be formatted as 10%8. Does the federal government personal income tax use a graduated tax rate schedule or a linear tax rate schedule?LINEARGRADUATED9. Does Indiana’s personal income tax use a graduated tax rate schedule or a linear tax rate schedule?GRADUATEDLINEAR10. We know a tax system is progressive if:AVERAGE TAX RATE INCREASES WITH INCOMEAVERAGE TAX RATE DECLINES WITH INCOME.AVERAGE TAX RATE DOES NOT VARY WITH INCOME.11. What is the main difference between a static score and a micro-dynamic score?Your response should be in no more than three sentences.12. What is the main difference between a macro-dynamic score and a micro-dynamic score?Your response should be in no more than three sentences.Use the following information to answer the next two questions.sales tax rate2018201920202021current law5%10%10%10%current policy5%5%5%5%proposal7%7%7%7%total consumption$100$100$100$10013. What is the static score of the proposal using a current law baseline? Please express your answer in whole numbers and express the answer with a negative where appropriate. For example, (10% minus 15%) multiplied by 100 would equal -5. Your computation should begin with the proposal first.Static Tax Estimate (Score)current law14. What is the static score of the proposal using a current policy baseline? Please express your answer in whole numbers and express the answer with a negative where appropriate. For example, (10% minus 15%) multiplied by 100 would equal -5. Your computation should begin with the proposal first.Static Tax Estimate (Score)current lawSuppose a taxpayer has total gross income of $100, deduction of $15, and faces a marginal tax rate of 20%. Use this info to answer the next three questions.15. What is the taxpayer’s tax liability? Your response should be in dollars using the dollar sign ($).16. What is the taxpayer’s average effective tax rate (AETR)? HINT: AETR is defined as tax liability divided by total gross income. Your response should be expressed in a percent with the percent (%) sign.17. Which of the following is correct?THE TAXPAYER’S AVERAGE EFFECTIVE TAX RATE IS LARGER THAN THE MARGINAL TAX RATE.THE TAXPAYER’S AVERAGE EFFECTIVE TAX RATE IS SMALLER THAN THE MARGINAL TAX RATE.THE TAXPAYER’S AVERAGE EFFECTIVE TAX RATE IS EQUAL TO THE MARGINAL TAX RATE.