Tax 4001 Exam 1 Review
"an old tax is a good tax" - ANS-- beneficial for the economy and brings confidence to
people and companies due to familiarity; shifts in policy is unsettling
- emphasizes theory on "efficiency" of tax system since efficient taxes should not
change the behavior of the people and companies
abatements - ANS-a property tax exemption granted by a government for a limited
period of time
ad valorem taxes - ANS-real property taxes and personal property taxes; significant
source of revenue for local governments
assignment of income doctrine - ANS-income must be taxed to the entity that renders
the service or own the capital with respect to which income is paid
average rate - ANS-the tax rate determined by dividing total tax liability by the total base
capital gain - ANS-gain realized on the sale or exchange of a capital asset and may be
eligible for a preferential tax rate; favorable under federal law
convenience - ANS-the second standard of a good tax; a tax should be convenient for
the government to administer and for taxpayers to pay
declining marginal utility of income - ANS-the theory that the financial importance
associated with each dollar of income diminishes as the total income increases
earmarked tax - ANS-a tax that generates revenues for a designated project or program
rather than for the gov'ts general fund
explain the political process to make tax law - ANS-begins in the house of
representatives and tax legislation is drafted by the house ways and means committee
then sent to the senate finance committee to present or amend bill before it goes to the
full Senate
federal transfer taxes - ANS-tax charged by the state or local gov't to complete a sale of
property from one owner to another
"an old tax is a good tax" - ANS-- beneficial for the economy and brings confidence to
people and companies due to familiarity; shifts in policy is unsettling
- emphasizes theory on "efficiency" of tax system since efficient taxes should not
change the behavior of the people and companies
abatements - ANS-a property tax exemption granted by a government for a limited
period of time
ad valorem taxes - ANS-real property taxes and personal property taxes; significant
source of revenue for local governments
assignment of income doctrine - ANS-income must be taxed to the entity that renders
the service or own the capital with respect to which income is paid
average rate - ANS-the tax rate determined by dividing total tax liability by the total base
capital gain - ANS-gain realized on the sale or exchange of a capital asset and may be
eligible for a preferential tax rate; favorable under federal law
convenience - ANS-the second standard of a good tax; a tax should be convenient for
the government to administer and for taxpayers to pay
declining marginal utility of income - ANS-the theory that the financial importance
associated with each dollar of income diminishes as the total income increases
earmarked tax - ANS-a tax that generates revenues for a designated project or program
rather than for the gov'ts general fund
explain the political process to make tax law - ANS-begins in the house of
representatives and tax legislation is drafted by the house ways and means committee
then sent to the senate finance committee to present or amend bill before it goes to the
full Senate
federal transfer taxes - ANS-tax charged by the state or local gov't to complete a sale of
property from one owner to another
