Chapter 1 reading assignment

income;substitution

.The ______ effect predicts that when taxpayers are taxed more, they will work harder to generate the same after-tax dollars, while the ______ effect predicts they will engage in other pursuits since the marginal value of taxable activities has decreased.

government

A tax is a payment required by a(n) ______ that is unrelated to any specific benefit or service received by the taxpayer.

earmarked

A(n) ______ tax is a tax that is assessed for a specific purpose.

proportional, progressive, regressive

A(n) ______ tax structure applies the same tax rate to all levels of income, while a(n) ______ tax structure applies higher tax rates as the tax base increases and a(n) ______ tax structure applies lower tax rates as the tax base increases.

sally;andrew

Andrew argues that a tax rate increase will simply cause taxpayers to work more to generate the same after tax dollars as before the tax rate increase. Sally disagrees and believes that taxpayers will engage in more leisure activities since the after tax value of additional work has decreased. The basis of ______ 's argument is the substitution effect, while the basis for ______ 's argument is the income effect.

sufficiency

Assessing the _____ of a tax system means determining the amount of tax revenue needed to fund the government and ensuring that the funds are provided by the system.

Proportional

Blade pays tax of $5,000 on taxable income of $50,000 while Caden pays tax of $10,000 on taxable income of $100,000. What type of tax rate structure appears to be in force?

transfer or death

Federal estate and gift taxes are also known as ______ taxes

They benefit from government-provided programs and services, such as national defense and public schools.

How do taxpayers benefit from taxes paid to a government?

Blank 1: 15,000 or 15000 Blank 2: credit

In 2020, the annual gift exclusion totals $ ______ per donee. The unified tax ______ exempts up to $11,580,000 in lifetime gifts and bequests upon the death of a taxpayer.

dynamic forecasting

In order to raise revenue in the city of Hamlet, the city considered assessing a local tax on food served in restaurants. When forecasting the amount of revenue that would be generated by the new tax, the budget officials suggested that about 10% of current customers would likely quit eating out in Hamlet and drive to the nearest town. This is an example of:

Blank 1: corporate Blank 2: 4 or four Blank 3: 4.5 Blank 4: implicit

Jack has $1,000 to invest. He has a choice between municipal bonds with an interest rate of 4% or corporate bonds with an interest rate of 6%. Jack has a marginal tax rate of 25%. Given this information, Jack should invest in the ______ bonds. The after-tax rate of return on the municipal bonds is ______ % and the after tax rate of return on the corporate bonds is ______ %. The difference in the rates of return is known as ______ taxes

Considering that taxpayers should be able to determine when, where, and how to calculate and pay the tax

Judging the certainty of a tax system is best described by which of the following?

A portion of the additional $19,000 will be taxed at 22% and a portion will be taxed at 24%.

Marcus and Lydia Brown are married and filing jointly and have $155,000 in taxable income. Lydia has been offered a job promotion which will increase their taxable income to $174,000 in 2019. This additional income will move them into the next graduated tax bracket (24%). Which of the following statements is correct?

Marginal tax rate

Mary Beth is considering accepting some additional contract work. She is trying to evaluate whether the compensation for the job is worth the effort. Which tax rate should she use to calculate her after-tax proceeds of accepting the job?

How should the business compensate employees? Where should a business locate? What organizational form should a business use?

Please check which business decisions would likely be affected by tax laws. (Check all that apply.)

10

Shelby bought a dress costing $200 from Arlene's Dress Shop in a state where there is a sales tax rate of 5%. Shelby had to pay ______ dollars in sales tax.

implicit

Since municipal bonds are tax-exempt, they typically earn a lower rate of return than taxable bonds. The lower rate of return relative to taxable bonds is often referred to as a(n) ______ tax.

The implicit tax associated with owning the city of Atlantis bonds is $30.

The city of Atlantis sold bonds that pay interest of 4 percent annually. Pacific, Inc. sold taxable bonds comparable to the city bonds that pay 7 percent interest annually. Which of the following statements is correct when considering the purchase of a $1,000 bond?

Vertical equity

The federal income tax is designed on a progressive rate structure so that those taxpayers earning more income are taxed at higher rates than those taxpayers earning less. This structure is based on what premise?

progressive

The federal individual income tax system in the United States uses a(n) ______ tax structure.

revenue; government

The general purpose of a tax is to raise ______ to fund the operations of the ______

retail sales cost

The tax base for sales tax is the ______ of goods and certain services provided.

Choosing a public school for your children

Which of the following common decisions would most likely NOT be influenced by the United States income tax laws?

Choosing a vacation destination

Which of the following decisions would most likely NOT be influenced by our tax system?

A payment required by a government that is unrelated to any specific benefit or service received from the government.

Which of the following definitions describes a tax?

Income tax

Which of the following federal taxes comprises the highest percentage (almost half) of all tax revenues collected by the U.S. government?

The tax rate applied to the next additional increment of a taxpayer's taxable income (or deductions)

Which of the following sentences describes the marginal tax rate?

Sin taxes discourage undesirable, yet legal, behaviors such as smoking and drinking.

Which of the following statements is true regarding sin taxes?

Political candidates often distinguish themselves from their opponents based on their tax policies.

Which of the following statements is true regarding taxes?

Federal corporate income tax

Which of the following taxes uses a proportional tax rate structure?

Social security tax

Which of the following taxes uses a regressive tax rate structure?

Car repair services

Which of the following transactions would NOT likely be subject to an excise tax?

use tax

Which type of tax is based on the retail price of goods owned, possessed, or consumed within a state that were NOT purchased within the state?