Federal Taxation - Exam 1 Questions with 100% Correct Answers

Decisions in which taxes are an influencing factor Correct Answer Taxes affect many aspects of personal, business, and political decisions (1-3) Components necessary to calculate tax Correct Answer Tax=Tax Base x Tax Rate Definition of tax Correct Answer A payment required by a government that is unrelated to any specific benefit or services received from the government Proportional Tax Rate Structure Correct Answer Tax rate stays the same like sales tax Progressive Tax Rate Structure Correct Answer Increasing marginal tax rate as tax base increases. As tax base increases both marginal tax rate and taxes paid increase. Such as federal and most income state taxes Regressive Tax Rate structure Correct Answer Decreasing marginal tax rate as the tax base increases. Examples are social security tax and federal and state unemployment taxes Federal revenue Correct Answer Income tax (most significant) Employment tax (2nd largest) Excise Tax (Particular products like alcohol or services like telephone use) Estate and Gifts (least significant) State revenue Correct Answer Income tax Sales & Use tax Property Tax Excise Tax Property Tax Correct Answer Real property-land, structures, improvements permanently attached Personal Property-boats, private planes, stocks, bonds Horizontal Equity Concept Correct Answer Two taxpayers in similar situations pay the same tax. The failures to this concept are due to tax preferences Certainty Correct Answer Taxpayers should be able to determine when to pay the tax, where to pay the tax , and how to determine the tax. Factors that determine filing necessity Correct Answer Filing status, age, and gross income