TAX 4001 Exam Questions Well Answered Latest Update 2025-2026
What are the 2 components of taxes? - Answers Tax rate and tax base
What are the 3 types of tax rates? - Answers Proportional, progressive and regressive
Proportional Taxes - Answers the rate of tax remains constant over the tax base (sales tax)
Progressive taxes - Answers Tax rates increase as the tax base grows larger (Federal income,
gift and estate tax)
Regressive taxes - Answers Tax rates decrease as the tax base grows larger (Federal
employment taxes such as FUTA and FICA)
What are the different tax bases? - Answers Transactions, Property or wealth, Privileges and
rights, and income
What does Transaction taxes include? - Answers sales and transfers of wealth
What does Property or wealth taxes include? - Answers real estate taxes and ownership of
property
What does Privileges and rights taxes include? - Answers the ability to use the corporate form or
to be in certain professions,excise taxes, and custom duties
What does Income taxes include? - Answers gross or net income
After income taxes, what taxes usually affect more US taxpayers than any other type of tax? -
Answers Transaction taxes
Taxes on the Production and Sale of Goods include? - Answers Excise, Sales and Use and Value
added taxes
Excise taxes - Answers 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? - Answers producers, resellers or consumers
Are excise taxes proportional, regressive or progressive? - Answers Proportional they may vary
greatly from state to state.
What are Sales and Use Taxes? - Answers Major source of income from most state and local
governments, and cover a broad base of transactions.
Sales and Use taxes rates are? - Answers Proportional and collected by retailers.
What is a use tax? - Answers A use tax is imposed on items bought in a lower sales tax locality
and transported for use in another locality.
What are the 2 components of taxes? - Answers Tax rate and tax base
What are the 3 types of tax rates? - Answers Proportional, progressive and regressive
Proportional Taxes - Answers the rate of tax remains constant over the tax base (sales tax)
Progressive taxes - Answers Tax rates increase as the tax base grows larger (Federal income,
gift and estate tax)
Regressive taxes - Answers Tax rates decrease as the tax base grows larger (Federal
employment taxes such as FUTA and FICA)
What are the different tax bases? - Answers Transactions, Property or wealth, Privileges and
rights, and income
What does Transaction taxes include? - Answers sales and transfers of wealth
What does Property or wealth taxes include? - Answers real estate taxes and ownership of
property
What does Privileges and rights taxes include? - Answers the ability to use the corporate form or
to be in certain professions,excise taxes, and custom duties
What does Income taxes include? - Answers gross or net income
After income taxes, what taxes usually affect more US taxpayers than any other type of tax? -
Answers Transaction taxes
Taxes on the Production and Sale of Goods include? - Answers Excise, Sales and Use and Value
added taxes
Excise taxes - Answers 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? - Answers producers, resellers or consumers
Are excise taxes proportional, regressive or progressive? - Answers Proportional they may vary
greatly from state to state.
What are Sales and Use Taxes? - Answers Major source of income from most state and local
governments, and cover a broad base of transactions.
Sales and Use taxes rates are? - Answers Proportional and collected by retailers.
What is a use tax? - Answers A use tax is imposed on items bought in a lower sales tax locality
and transported for use in another locality.
