When you pay taxes on a purchase, who ultimately receives the tax money?

• A. The money is returned to the buyer.
• B. The seller keeps the tax money as additional profit.
• C. The manufacturer receives the tax money.
• D. The government collects the tax money from the seller.

Answer: (D)

Verified step by step guidance

1. Understand that when a tax is imposed on a purchase, it is typically collected by the seller at the point of sale.
2. Recognize that the seller acts as an intermediary who collects the tax from the buyer and then remits it to the government.
3. Note that the tax money does not become additional profit for the seller, nor does it go to the manufacturer, but is passed on to the government.
4. Realize that the buyer ultimately pays the tax as part of the purchase price, but the collected tax funds are transferred to the government by the seller.
5. Conclude that the government is the final recipient of the tax money collected on purchases.