TAX5025 Chapter 1
QUESTIONS WITH ANSWERS 2026/2027
what is a tax? - ANSWER✔ � -a payment required by the government
- mandatory
- a tax is unrelated to any specific benefit or service from the government
- fine is NOT a tax (parking ticket, speeding ticket)
- special assessment, not a tax
formula to calculate tax - ANSWER✔ � -tax = base * rate
- tax base = taxable income
proportional tax - ANSWER✔ � -the tax rate is constant regardless of income level
progressive tax - ANSWER✔ � -tax rate increase as income increases
* income tax rate structure in the US
regressive tax - ANSWER✔ � -tax rate decreases as income increases
- not many taxes like this, sales tax is a kind of regressive tax
marginal tax rate - ANSWER✔ � -- rate of tax on additional dollar of income or saved by each additional
dollar of deduction
QUESTIONS WITH ANSWERS 2026/2027
what is a tax? - ANSWER✔ � -a payment required by the government
- mandatory
- a tax is unrelated to any specific benefit or service from the government
- fine is NOT a tax (parking ticket, speeding ticket)
- special assessment, not a tax
formula to calculate tax - ANSWER✔ � -tax = base * rate
- tax base = taxable income
proportional tax - ANSWER✔ � -the tax rate is constant regardless of income level
progressive tax - ANSWER✔ � -tax rate increase as income increases
* income tax rate structure in the US
regressive tax - ANSWER✔ � -tax rate decreases as income increases
- not many taxes like this, sales tax is a kind of regressive tax
marginal tax rate - ANSWER✔ � -- rate of tax on additional dollar of income or saved by each additional
dollar of deduction
