Chapter 1
The city of Springvale imposes a net income tax on businesses operating within its jurisdiction. The tax equals 1% of income up to $100,000 and 1.5% of income in excess of $100,000. The Springvale Bar and Grill generated $782,000 net income this year. Compute its city income tax.
$11,230
Which of the following is an earmarked tax?
A tax that generates revenues that the government can spend only to build more National Parks
Which of the following taxes is a significant source of revenue for state governments?
All of the choices are correct
Which of the following does not characterize federal transfer taxes?
All of these choices characterize federal transfer taxes.
Which of the following federal taxes is earmarked for a specific purpose?
Both employment taxes and unemployment taxes are earmarked taxes.
A business that operates in more than one state is required to pay state income tax only to the state in which it is incorporated. T/F
False
A state government may levy either a sales tax or a use tax on consumers but not both. T/F
False
A tax on net income is an example of a transaction-based tax. T/F
False
Payment of a tax entitles the payer to a specific good or service from the government. T/F
False
The U.S. Constitution requires that federal tax legislation begins in the Senate T/F
False
The federal government collects more revenue from the corporate income tax than from the individual income tax. T/F
False
Mr. Smith resides in a state with a 6% sales and use tax. He recently traveled to another state to buy furniture and paid that state's 7% sales tax. Which of the following statements is true?
Mr. Smith does not owe a use tax to his home state.
Which of the following statements regarding the political process of creating tax law is false?
Special interest groups have little effect on the tax legislative process.
Which of the following is not an advantage of state conformity to federal corporate income tax laws?
States have complete control over their corporate income tax revenues.
A sales tax is an example of a transaction-based tax. T/F
True
