C237 Taxation I Review Exam with verified detailed ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
answers
After the reinstatement of the individual federal income tax in 1894, why was the tax
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challenged in the courts? - ✔✔Administration would be difficult since the tax was ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
apportioned in proportion to state populations ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What are two primary sources of tax law in the United States? - ✔✔Revenue Rulings, Court
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Decisions, Internal Revenue Code, Congressional Committee Reports, Income Tax ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Regulations, Revenue Procedures, and letter rulings ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What is a primary source of tax law in the United States? - ✔✔Internal Revenue Code, or
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IRS Publications
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What is a desirable characteristic when evaluating a tax system? - ✔✔Tax rules and
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regulations are changed frequently ||//\\|| ||//\\|| ||//\\||
What is horizontal Equity? - ✔✔the notion that similarly situated taxpayers should be
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treated equally ||//\\||
What is Vertical Equity - ✔✔Implies that taxpayers who are not similarly situated should be
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treated differently.
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What is an example of equity when evaluating a tax system? - ✔✔Each taxpayer pays a
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different amount based on their income level. ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What is Tax Base? - ✔✔The amount to which the tax rate applied to determine the tax due.
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(taxable income) ||//\\||
, What increases the tax base of an individual? - ✔✔Interest Income
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Progressive Rate - ✔✔where the rate of tax increases as the tax base increases ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Proportional Tax or Flat Tax - ✔✔where the rate of tax is the same for all tax payers ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Tax used for Real estate taxes, state and local sales tax, custom duties, and excise taxes. -
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✔✔Proportional Tax ||//\\||
Regressive Tax - ✔✔Rate decreases with an increase in the tax base ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Tax used for FICA - ✔✔Regressive Tax
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Marginal Tax Rate - ✔✔applied to an incremental amount of taxable income that is added
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to the tax base.
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Average Tax Rate - ✔✔Dividing the Total tax liability by the amount of taxable income
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Effective Tax Rate - ✔✔Total tax liability divided by total economic income
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Total Economic income - ✔✔all types of economic income that a taxpayer has for the year
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Understand how to compute Marginal Tax Rate - ✔✔ ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Which tax is considered proportional? - ✔✔Excise Tax
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answers
After the reinstatement of the individual federal income tax in 1894, why was the tax
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
challenged in the courts? - ✔✔Administration would be difficult since the tax was ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
apportioned in proportion to state populations ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What are two primary sources of tax law in the United States? - ✔✔Revenue Rulings, Court
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Decisions, Internal Revenue Code, Congressional Committee Reports, Income Tax ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Regulations, Revenue Procedures, and letter rulings ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What is a primary source of tax law in the United States? - ✔✔Internal Revenue Code, or
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
IRS Publications
||//\\||
What is a desirable characteristic when evaluating a tax system? - ✔✔Tax rules and
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
regulations are changed frequently ||//\\|| ||//\\|| ||//\\||
What is horizontal Equity? - ✔✔the notion that similarly situated taxpayers should be
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
treated equally ||//\\||
What is Vertical Equity - ✔✔Implies that taxpayers who are not similarly situated should be
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
treated differently.
||//\\|| ||//\\||
What is an example of equity when evaluating a tax system? - ✔✔Each taxpayer pays a
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
different amount based on their income level. ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
What is Tax Base? - ✔✔The amount to which the tax rate applied to determine the tax due.
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
(taxable income) ||//\\||
, What increases the tax base of an individual? - ✔✔Interest Income
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Progressive Rate - ✔✔where the rate of tax increases as the tax base increases ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Proportional Tax or Flat Tax - ✔✔where the rate of tax is the same for all tax payers ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Tax used for Real estate taxes, state and local sales tax, custom duties, and excise taxes. -
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
✔✔Proportional Tax ||//\\||
Regressive Tax - ✔✔Rate decreases with an increase in the tax base ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Tax used for FICA - ✔✔Regressive Tax
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Marginal Tax Rate - ✔✔applied to an incremental amount of taxable income that is added
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
to the tax base.
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Average Tax Rate - ✔✔Dividing the Total tax liability by the amount of taxable income
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Effective Tax Rate - ✔✔Total tax liability divided by total economic income
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Total Economic income - ✔✔all types of economic income that a taxpayer has for the year
||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Understand how to compute Marginal Tax Rate - ✔✔ ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\|| ||//\\||
Which tax is considered proportional? - ✔✔Excise Tax
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