Internal Revenue Service United States Department of the Treasury
Theme 4: What Is Taxed and WhyLesson 1: Federal/State/Local Taxes


Activity 1: Town Manager for a Day
Conference meeting

Imagine that you are the town manager of a city named Springville. This year Springville received a $60,000 grant from the federal government to help support certain public services. Congress has recently voted to reduce this funding to $45,000 next year. One of your primary goals as town manager is to avoid cutting services. Together, you and several city council members have proposed various ways to raise additional revenue. Some have proposed increasing property taxes. Others want to increase the local sales tax from 1 percent to 2 percent. Another proposal is to charge individual income taxes at a flat rate of 2 percent. How will each proposal affect the taxpayers of Springville?

Calculate the following. Type your answers in the spaces provided. To assess your answers, click the Check My Answers button at the bottom of the page.


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