TAX 4001 QUESTIONS & ANSWERS
What are the 2 components of taxes? - Answer -Tax rate and tax base
What are the 3 types of tax rates? - Answer -Proportional, progressive and regressive
Proportional Taxes - Answer -the rate of tax remains constant over the tax base (sales
tax)
Progressive taxes - Answer -Tax rates increase as the tax base grows larger (Federal
income, gift and estate tax)
Regressive taxes - Answer -Tax rates decrease as the tax base grows larger (Federal
employment taxes such as FUTA and FICA)
What are the different tax bases? - Answer -Transactions, Property or wealth,
Privileges and rights, and income
What does Transaction taxes include? - Answer -sales and transfers of wealth
What does Property or wealth taxes include? - Answer -real estate taxes and
ownership of property
What does Privileges and rights taxes include? - Answer -the ability to use the
corporate form or to be in certain professions,excise taxes, and custom duties
What does Income taxes include? - Answer -gross or net income
After income taxes, what taxes usually affect more US taxpayers than any other type of
tax? - Answer -Transaction taxes
Taxes on the Production and Sale of Goods include? - Answer -Excise, Sales and Use
and Value added taxes
Excise taxes - Answer -levied by federal and state governments on exchanges of
specified commodities (oil, alcohol, phone service, and tobacco) or services.
Who are excise taxes levied on? - Answer -producers, resellers or consumers
Are excise taxes proportional, regressive or progressive? - Answer -Proportional they
may vary greatly from state to state.
What are Sales and Use Taxes? - Answer -Major source of income from most state
and local governments, and cover a broad base of transactions.
What are the 2 components of taxes? - Answer -Tax rate and tax base
What are the 3 types of tax rates? - Answer -Proportional, progressive and regressive
Proportional Taxes - Answer -the rate of tax remains constant over the tax base (sales
tax)
Progressive taxes - Answer -Tax rates increase as the tax base grows larger (Federal
income, gift and estate tax)
Regressive taxes - Answer -Tax rates decrease as the tax base grows larger (Federal
employment taxes such as FUTA and FICA)
What are the different tax bases? - Answer -Transactions, Property or wealth,
Privileges and rights, and income
What does Transaction taxes include? - Answer -sales and transfers of wealth
What does Property or wealth taxes include? - Answer -real estate taxes and
ownership of property
What does Privileges and rights taxes include? - Answer -the ability to use the
corporate form or to be in certain professions,excise taxes, and custom duties
What does Income taxes include? - Answer -gross or net income
After income taxes, what taxes usually affect more US taxpayers than any other type of
tax? - Answer -Transaction taxes
Taxes on the Production and Sale of Goods include? - Answer -Excise, Sales and Use
and Value added taxes
Excise taxes - Answer -levied by federal and state governments on exchanges of
specified commodities (oil, alcohol, phone service, and tobacco) or services.
Who are excise taxes levied on? - Answer -producers, resellers or consumers
Are excise taxes proportional, regressive or progressive? - Answer -Proportional they
may vary greatly from state to state.
What are Sales and Use Taxes? - Answer -Major source of income from most state
and local governments, and cover a broad base of transactions.
