TAX4001 Exam 1 2024/2025 Exam
Questions and Detailed Answers | Get it
100% Correct Answers
any decrease in tax due to a new tax law must be offset by an equal
increase in a tax imposed on another group - 🧠ANSWER ✔✔revenue
neutrality
a rule that a new law (or new measure) expires at a specific date unless
further legislative action is taken to extend the law; if no action is taken, the
original law is reinstated - 🧠ANSWER ✔✔sunset provision
a situation where inflation causes a given level of income into higher
income tax brackets; the result is an increase in income taxes but no
increase in real purchasing power of the underlying income - 🧠ANSWER
✔✔bracket creep
a Congressional response to bracket creep whereby tax brackets, standard
deductions, personal and dependency exemptions, etc are adjusted for
inflation - 🧠ANSWER ✔✔indexation
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
1
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,What deemed incoe tax unconstitutional? - 🧠ANSWER ✔✔Pollock v.
Farmers' Loan & Trust (1895)
What amendment allowed income taxes? - 🧠ANSWER ✔✔16th
Amendment (1913)
What is the current tax law named? - 🧠ANSWER ✔✔Internal Revenue
Code of 1986
Examples of tax laws and their objectives: define gross income broadly -
🧠ANSWER ✔✔Raise revenues for the government and avoid loopholes
Examples of tax laws and their objectives: progressive tax rates -
🧠ANSWER ✔✔Social objectives (tax those who can afford to pay and
enable taxpayers)
Examples of tax laws and their objectives: charitable contribution
deductions - 🧠ANSWER ✔✔Social objectives (encourage helping the
needy)
Examples of tax laws and their objectives: deny deductions of bribes and
fines - 🧠ANSWER ✔✔Social objectives and discourage certain activites
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
2
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Examples of tax laws and their objectives: accelerated depreciation -
🧠ANSWER ✔✔Encourage certain activites and economic objectives
What are the four components of Adam Smith's "Canons of Taxation"? -
🧠ANSWER ✔✔Equality, certainty, convenience, economy
Canons of Taxation: what is equality? - 🧠ANSWER ✔✔Fair and equitable
What is horizontal equality? - 🧠ANSWER ✔✔Taxpayers with the same
income pay the same tax
What is vertical equality? - 🧠ANSWER ✔✔Taxpayers with more income
pay more tax
Canons of Taxation: what is certainty? - 🧠ANSWER ✔✔Clear and
predictable
What is taxpayer certainty? - 🧠ANSWER ✔✔Predictable tax liability and
timing of when/where taxes are due
What is government certainty? - 🧠ANSWER ✔✔Predictable source of
revenue
Canons of Taxation: what is convenience? - 🧠ANSWER ✔✔Easily
assessed, collected, and administered
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
3
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, What is taxpayer certainty of convenience? - 🧠ANSWER ✔✔Taxpayers
should not be too burdened with record keeping and compliance costs
What is government certainty of convenience? - 🧠ANSWER ✔✔US income
tax is a voluntary compliance system where taxpayers are requested to
volunteer their financial information
Canons of Taxation: what is economy? - 🧠ANSWER ✔✔Minimal
compliance and administrative costs
What are the three types of tax rates? - 🧠ANSWER ✔✔Flat, progressive,
regressive
Q: Which tax rate is the most useful for tax planning decisions? -
🧠ANSWER ✔✔MTR
What are the top three federal revenue sources? - 🧠ANSWER
✔✔Individual income taxes (42%), payroll taxes (40%), and corporate
income (9%) taxes
What percentage of US population was subject to federal income taxes in
1939? - 🧠ANSWER ✔✔6%
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
4
PRIVACY STATEMENT. ALL RIGHTS RESERVED
Questions and Detailed Answers | Get it
100% Correct Answers
any decrease in tax due to a new tax law must be offset by an equal
increase in a tax imposed on another group - 🧠ANSWER ✔✔revenue
neutrality
a rule that a new law (or new measure) expires at a specific date unless
further legislative action is taken to extend the law; if no action is taken, the
original law is reinstated - 🧠ANSWER ✔✔sunset provision
a situation where inflation causes a given level of income into higher
income tax brackets; the result is an increase in income taxes but no
increase in real purchasing power of the underlying income - 🧠ANSWER
✔✔bracket creep
a Congressional response to bracket creep whereby tax brackets, standard
deductions, personal and dependency exemptions, etc are adjusted for
inflation - 🧠ANSWER ✔✔indexation
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
1
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,What deemed incoe tax unconstitutional? - 🧠ANSWER ✔✔Pollock v.
Farmers' Loan & Trust (1895)
What amendment allowed income taxes? - 🧠ANSWER ✔✔16th
Amendment (1913)
What is the current tax law named? - 🧠ANSWER ✔✔Internal Revenue
Code of 1986
Examples of tax laws and their objectives: define gross income broadly -
🧠ANSWER ✔✔Raise revenues for the government and avoid loopholes
Examples of tax laws and their objectives: progressive tax rates -
🧠ANSWER ✔✔Social objectives (tax those who can afford to pay and
enable taxpayers)
Examples of tax laws and their objectives: charitable contribution
deductions - 🧠ANSWER ✔✔Social objectives (encourage helping the
needy)
Examples of tax laws and their objectives: deny deductions of bribes and
fines - 🧠ANSWER ✔✔Social objectives and discourage certain activites
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
2
PRIVACY STATEMENT. ALL RIGHTS RESERVED
,Examples of tax laws and their objectives: accelerated depreciation -
🧠ANSWER ✔✔Encourage certain activites and economic objectives
What are the four components of Adam Smith's "Canons of Taxation"? -
🧠ANSWER ✔✔Equality, certainty, convenience, economy
Canons of Taxation: what is equality? - 🧠ANSWER ✔✔Fair and equitable
What is horizontal equality? - 🧠ANSWER ✔✔Taxpayers with the same
income pay the same tax
What is vertical equality? - 🧠ANSWER ✔✔Taxpayers with more income
pay more tax
Canons of Taxation: what is certainty? - 🧠ANSWER ✔✔Clear and
predictable
What is taxpayer certainty? - 🧠ANSWER ✔✔Predictable tax liability and
timing of when/where taxes are due
What is government certainty? - 🧠ANSWER ✔✔Predictable source of
revenue
Canons of Taxation: what is convenience? - 🧠ANSWER ✔✔Easily
assessed, collected, and administered
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
3
PRIVACY STATEMENT. ALL RIGHTS RESERVED
, What is taxpayer certainty of convenience? - 🧠ANSWER ✔✔Taxpayers
should not be too burdened with record keeping and compliance costs
What is government certainty of convenience? - 🧠ANSWER ✔✔US income
tax is a voluntary compliance system where taxpayers are requested to
volunteer their financial information
Canons of Taxation: what is economy? - 🧠ANSWER ✔✔Minimal
compliance and administrative costs
What are the three types of tax rates? - 🧠ANSWER ✔✔Flat, progressive,
regressive
Q: Which tax rate is the most useful for tax planning decisions? -
🧠ANSWER ✔✔MTR
What are the top three federal revenue sources? - 🧠ANSWER
✔✔Individual income taxes (42%), payroll taxes (40%), and corporate
income (9%) taxes
What percentage of US population was subject to federal income taxes in
1939? - 🧠ANSWER ✔✔6%
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
4
PRIVACY STATEMENT. ALL RIGHTS RESERVED
