Econ 138A ch 1&2 quiz

When a tax rate increase induces people to engage more heavily in income producing activities, this is referred to as a(n)

income effect

Assume that, this year, Country A significantly increased individual income tax rates. As a result, a significant number of taxpayers decided to leave the workforce because there was less economic incentive to work. This can best be described as a(n)

substitution effect

What is the most common structure for corporate state income taxes? Regressive Reason: Most states use a flat tax structure. Highly progressive, graduated Reason: Most states use a flat tax structure. Flat

Flat

Which statement about the federal tax law is false? New tax legislation is typically passed once every two to four years. Tax law is compiled in the Internal Revenue Code. The Internal Revenue Code of 1986 is the current version of the law under which we operate. Congress is responsible for passing tax legislation.

New tax legislation is typically passed once every two to four years. Reason: Tax law is dynamic. Modifications to the law happen every year.

Which of the following federal taxes are earmarked for a specific purpose? (Select all that apply.) Individual Income Tax Corporate Income Tax Medicare Social Security

Medicare Social Security

VAT

multiply marginal rev x number of units and then multiply that by the tax rate

in what cases can US govt tax someone

not a citizen but permanent resident not a citizen but own real estate, can tax rent income citizen but not resident not a citizen or resident but conducts business in US

Rank the following in terms of highest judicial authority to lowest judicial authority.

supreme appellate trial

income tax ability to pay is based on

taxable income

regressive rate structure

the average rate decreases as the tax base (corporate income) increases if rate is 7% for the first $5m and a person makes $7m the marginal rate is 0%

The incidence of sales tax levied on the purchase of retail goods is borne by the ______. ultimate consumer of the good manufacturer of the good government who levies the tax seller who collects and remits the tax Reason: The seller only collects the tax at the time of the sale. It is the consumer who bears the incidence of taxation.

ultimate consumer of the good

tranfer taxes (estate and gift taxes) ability to pay is based on

wealth

Under the U.S. system of taxation, which of the following would generally not be considered a taxpayer? An individual person A partnership A corporation

A partnership Reason: A partnership is a pass-through entity where the tax liability is passed to the partners.

Which of the following statements about tax exempt status and tax abatements are TRUE? (Choose all that apply.) A tax abatement is generally granted on a more temporary basis relative to tax exempt status. Tax exempt status is generally granted on a relatively permanent basis. Tax exempt status is generally granted to encourage commercial development. Reason: Tax exempt status is typically granted to religious, charitable, or educational organizations. Tax abatements are typically granted to religious, charitable, or educational organizations. Reason: Tax abatements are typically granted to commercial enterprises.

A tax abatement is generally granted on a more temporary basis relative to tax exempt status. Tax exempt status is generally granted on a relatively permanent basis.

Which of the following is not a characteristic of a tax? A tax is compulsory. A tax is intended to punish unacceptable behavior. A tax is levied by a government. A tax is intended to support the cost of government.

A tax is intended to punish unacceptable behavior.

Which of the following is the best example of an activity-based tax? An excise tax Reason: An excise tax is a transaction-based tax. A gift tax based on the transfer of gifted assets Reason: A gift tax is a transaction--based tax. A tax on business net income

A tax on business net income

Which of the following statements about vertical equity is false? A tax rate structure with only one tax bracket is the best example of a vertically equitable tax system. A tax system is considered vertically equitable if a taxpayer with greater ability to pay owes more tax than those with less ability to pay. Vertical equity focuses on a fair rate structure rather than a fair measure of the tax base.

A tax rate structure with only one tax bracket is the best example of a vertically equitable tax system. Reason: Vertically equitable tax systems generally have multiple, graduated tax brackets.

Which of the following statements about tax rate structures is true? A tax structure that is graduated must either be regressive or progressive. Regressive tax rate structures are never observed in the U.S. Reason: For example, social security is a regressive tax rate structure. Sales tax is often also referred to as regressive. A proportionate tax rate structure is the only structure that results in vertical equity.

A tax structure that is graduated must either be regressive or progressive. Reason: It is progressive if the tax rate increases with the base (federal income tax) or regressive if the tax rate decreases with the base (social security).

Which of the following is the best example of an earmarked tax? A tax imposed on specific items, such as cigarettes or beer A tax that generates revenues that the government may only use to maintain National Parks A tax imposed only on individuals who earn more than $1,000,000 A tax that generates revenues the government may spend for any purpose

A tax that generates revenues that the government may only use to maintain National Parks

revenue procedure

Advises taxpayers on how to comply with IRS procedural and administrative matters

Which of the following statements best describe the classical standard of tax efficiency? (Select all that apply.) An efficient tax includes tax incentives for domestic investment. An efficient tax is a neutral factor in free market economy. An efficient tax encourages full employment. An efficient tax does not change taxpayer behavior.

An efficient tax is a neutral factor in free market economy. An efficient tax does not change taxpayer behavior.

Which of the following statements does not describe the Keynesian standard of tax efficiency? An efficient tax encourages price-level stability. An efficient tax encourages steady economic growth. An efficient tax encourages full employment. An efficient tax is neutral and not used as a tool for fiscal policy.

An efficient tax is neutral and not used as a tool for fiscal policy.

Which of the following statements about methods for increasing tax revenues is false? Increasing tax rates is a transparent means for raising taxes. Therefore, Congress is often met with opposition when it proposes rate increases. Broadening a tax base is often considered a more subtle way to increase taxes. Therefore, it has recently become a preferred method of politicians. An example of broadening an existing base would be if Texas implemented a new tax on individual income.

An example of broadening an existing base would be if Texas implemented a new tax on individual income. Reason: This would be an example of taxing a new base. The base would be individual income.

Big Corporation's federal income tax increased by $100,000 this year. As a result, Big reduced the annual dividend paid to shareholders by $50,000 and also increased the sales price of its products to generate another $50,000 in revenue. Who bears the incidence of the corporate tax increase? (Select all that apply.) Big's shareholders Big's customers Big's employees Big Corporation

Big's shareholders Big's customers

Which of the following does not meet the definition of personalty? Machinery Building Airplane Business intangibles

Building Reason: A building is realty. Personalty is defined as any asset that is not realty.

Which of the following is least likely to be subject to an excise tax? Liquor Gasoline Clothing Hotel accommodations

Clothing

Which of the following statements is false? Employment and unemployment taxes generate more federal tax revenues than corporate income taxes. Individual income taxes account for approximately 50% of federal tax revenues. Corporate income taxes generate more federal funds than any other federal tax structure.

Corporate income taxes generate more federal funds than any other federal tax structure. Reason: Individual income taxes account for approximately 50% of federal tax revenues.

Which of the following statements is true? Environmental pollution is an example of a negative externality. The U.S. tax system is used only as a means to raise government revenues. Reason: In addition to funding the government, the U.S. tax system is often used for social engineering. Governments are prohibited from using U.S. tax law to induce taxpayers to be more environmentally conscientious. Reason: For example, the U.S. tax law includes an excise tax associated with ozone-depleting chemicals.

Environmental pollution is an example of a negative externality.

revenue ruling

Explains how the IRS applies the tax law to a specific set of facts

True or false: The U.S. federal income tax reflects a proportionate rate structure. True Reason: The U.S. federal income tax has multiple tax brackets that increase as the tax base increases. Therefore, it is a progressive rate structure. False

False

True or false: While tax rates may vary across states, the computation of taxable income for state tax purposes is consistent. True Reason: Both the tax rates and the computation of state taxable income can vary across states. False

False

Which statement about taxes on personal property is false? Taxation of personal property is more effective when linked to a registration process such as that which is required of automobiles. Governments generally assess property taxes on personalty based on the value of the property as estimated by the government assessor. The most common intangible assets subject to personal property tax are marketable securities. Individual privacy rights make it difficult for governments to identify and search for personal property subject to tax.

Governments generally assess property taxes on personalty based on the value of the property as estimated by the government assessor.

Which of the following is true regarding the taxation of business income? Corporate income tax at the state level is generally levied on both net income and gross receipts attributable to the state. Reason: Corporate income tax is generally levied on either net income or gross receipts. In addition to paying state income tax, some corporations are also subject to an income tax levied by the city or county in which they operate. Very few states impose a corporate income tax because corporations are already heavily taxed at the federal level. Reason: In many cases, corporations pay income tax at both the federal and state level.

In addition to paying state income tax, some corporations are also subject to an income tax levied by the city or county in which they operate.

Which of the following statements is false about the taxation of online sales? A 2018 Supreme Court decision overturned earlier decisions with regard to the obligation to tax online sales. States may enact legislation compelling online retailers to collect sales tax based on the residence of the purchaser. In general, states are not interested in collecting tax on online sales because it leads to increased complexity for their tax systems.

In general, states are not interested in collecting tax on online sales because it leads to increased complexity for their tax systems. Reason: States have lobbied for federal legislation allowing them to collect sales tax.

Other than increasing tax revenues, identify ways in which governments have historically generated additional funds when faced with budget short-falls. (Select all that apply.) Incur debt Lotteries and legalized gambling Lease assets and property rights Encourage resident corporations to make voluntary contributions to the government

Incur debt Lotteries and legalized gambling Lease assets and property rights

Which federal tax generates the most government revenues? Federal Excise Taxes Reason: Individual income taxes generate the most government revenues. Individual Income Tax Federal Estate Tax Reason: Individual income taxes generate the most government revenues. Corporate Income Tax Reason: Individual income taxes generate the most government revenues.

Individual Income Tax

Revenue Rulings and Revenue Procedures are written by the ______. Department of the Treasury Internal Revenue Service (IRS) Supreme Court U.S. Congress

Internal Revenue Service (IRS)

Research regarding the federal tax system suggest all of the following except: As public confidence in the fairness of the tax system erodes, compliance also deceases. Many complexities in the tax system were designed to provide loopholes that can be exploited to lower tax liabilities. Individuals who believe the tax system is unfair are more likely to underreport their taxable income.

Many complexities in the tax system were designed to provide loopholes that can be exploited to lower tax liabilities.

Meagan currently works 50 hours a week, earning $100,000 per year. Tax rates are expected to significantly increase next year. Which of the following best reflects a substitution effect? Meagan has decided to look for a higher paying job so she may maintain the same after-tax income. Meagan has decided to cut back her work schedule to a more traditional 40 hours per week. Meagan has decided to increase the number of hours she works so that she will continue to earn the same after-tax income.

Meagan has decided to cut back her work schedule to a more traditional 40 hours per week.

Mr. White resides in State A which has a 6% sales and use tax. He recently traveled to State B to buy a car. State B levies a 5% sales and use tax. Which of the following statements is true? Mr. White does not owe use tax to State A if he can show documentation that he paid sales tax in State B. Reason: Mr. White will owe use tax in his home state if he paid a lower rate of sales tax when he purchased the car out of state. Mr. White owes use tax to State A equal to 1% of the purchase price. Reason: 6% - 5% = 1%. Mr. White owes use tax to State A equal to 5% of the purchase price. Reason: Mr. White owes use tax to State A equal to 1% of the purchase price (6% - 5%).

Mr. White owes use tax to State A equal to 1% of the purchase price. Reason: 6% - 5% = 1%.

Which of the following statements about property taxes are true? (Select all that apply.) Property taxes are also referred to as ad valorem taxes. Taxable property includes both the value of the land and any structures affixed to it. Property tax rates are determined annually based on budgetary needs of the local jurisdiction. Property taxes are generally levied by both the federal government and the local taxing authority.

Property taxes are also referred to as ad valorem taxes. Taxable property includes both the value of the land and any structures affixed to it. Property tax rates are determined annually based on budgetary needs of the local jurisdiction.

Indicate which of the following is least likely to be subject to a sales tax? Telephone service Purchase of athletic shoes at the mall Purchase of milk from the grocery store

Purchase of milk from the grocery store Reason: The majority of states exempt groceries from sales tax.

Which tax structure tends to provide local governments with the greatest source of tax revenue? Income tax Real property tax Employment tax Use tax

Real property tax

Which of the following statements concerning judicial authority is false? Supreme Court decisions are the equivalent of law. A Revenue Ruling is the least important source of judicial authority. Reason: Revenue Rulings are a source of administrative authority, not judicial authority. The weight of authority of a particular case depends on the specific court rendering the decision.

Revenue Rulings are a source of administrative authority, not judicial authority.

Which of the following statements best characterizes sales and use tax? (Select all that apply.) Several states have added a line to their personal tax forms that ask individuals to report their use tax obligation. All out-of-state purchases of assets will carry a use tax obligation. Reason: A use tax will only be levied when the state sales tax rate is higher in the home state than what was charged when the item was purchased out of state. Collections of use tax are highest on assets that must be registered, like automobiles. Most people are unaware that their out-of-state purchases are potentially subject to use tax. An individual may be subject to both a sales tax and a use tax on a particular item.

Several states have added a line to their personal tax forms that ask individuals to report their use tax obligation. Collections of use tax are highest on assets that must be registered, like automobiles. Most people are unaware that their out-of-state purchases are potentially subject to use tax. An individual may be subject to both a sales tax and a use tax on a particular item.

Which of the following is true about unemployment taxes and the benefits funded by this tax? Unemployment tax is levied on employees. Reason: Unemployment tax is levied on employers. State governments administer unemployment benefits. Unemployment benefits are funded only by state level unemployment taxes. Reason: Both federal and state unemployment taxes fund unemployment benefits.

State governments administer unemployment benefits.

Which of the following statements is false regarding state income taxes? The majority of states impose a personal income tax. States can only impose a state income tax on their residents. Reason: States can impose an income tax on their residents as well as on non-residents who earn income in their state. The computation of taxable income for state income tax purposes varies across states. Reason: The starting point is the same (federal taxable income), but individual states define further adjustments to arrive at state taxable income.

States can only impose a state income tax on their residents. Reason: States can impose an income tax on their residents as well as on non-residents who earn income in their state.

Which of the following statements are consistent with the Keynesian standard of efficiency? (Select all that apply.) Tax policy intended to alter behavior Tax policy that provides incentives Tax policy that is neutral with respect to the taxpayer Reason: Neutrality is associated with the classical standard of tax efficiency. Tax policy used as a tool for regulating the economy

Tax policy intended to alter behavior Tax policy that provides incentives Tax policy used as a tool for regulating the economy

how to describe environment/nature of tax

pervasive and dynamic

Which statement about tax policy is false? Tax policy reflects a government's attitude, objectives, and actions with respect to a tax system. Understanding the policy rationale often enables taxpayers to better interpret and apply the tax law. Tax policy is relevant only when trying to compute current tax obligation.

Tax policy is relevant only when trying to compute current tax obligation. Reason: Understanding current policy debates better enable managers to anticipate developments that may affect long-term strategies.

Identify two common arguments in support of taxing online sales. Taxation of online sales would level the playing field between traditional brick-and-mortar stores and online retailers. Implementation would be easy, since states do not compete for sales tax revenues. Taxation of online sales would generate significant tax revenues for the states.

Taxation of online sales would level the playing field between traditional brick-and-mortar stores and online retailers. Taxation of online sales would generate significant tax revenues for the states.

Identify issues that contribute to jurisdictional tax competition. (Select all that apply.) Taxpayers are increasingly mobile and can relocate to a jurisdiction to secure a better tax situation. Businesses increasingly operate on a global scale. Taxing jurisdictions often overlap. A world-wide tax treaty benefits some countries more than others. Reason: Most treaties are bilateral (involving only two counties) and serve to reduce the incidence of double taxation.

Taxpayers are increasingly mobile and can relocate to a jurisdiction to secure a better tax situation. Businesses increasingly operate on a global scale. Taxing jurisdictions often overlap.

What gives the federal government the right to impose a tax on individual and corporate income? The Bill of Rights Reason: The Sixteenth Amendment to the U.S. Constitution gives the federal government the right to tax income. The Internal Revenue Code Reason: The Sixteenth Amendment to the U.S. Constitution gives the federal government the right to tax income. The Revenue Act of 1913 Reason: The Sixteenth Amendment to the U.S. Constitution gives the federal government the right to tax income. The 16th Amendment to the U.S. Constitution

The 16th Amendment to the U.S. Constitution

Which of the following statements does not describe recent tax legislation? The Tax Reform Act of 1986 significantly increased individual income tax rates. The collapse of the housing market in 2008 caused the Bush and Obama administrations to implement tax policies designed to stimulate the economy. Over the past several decades, Congress has increased Social Security and Medicare taxes to help keep pace with increased related expenditures.

The Tax Reform Act of 1986 significantly increased individual income tax rates. Reason: The Tax Reform Act of 1986 decreased individual income tax rates

Mr. Johnson is a U.S. citizen residing in Argentina. Which of the following statements is true? Mr. Johnson can elect whether to pay tax in the U.S. or in Argentina. Reason: Both the U.S. and Argentina have jurisdiction to tax Mr. Johnson. The U.S. government has no jurisdiction to tax Mr. Johnson because he does not live in the U.S. Reason: U.S. citizens are subject to U.S. taxation on their worldwide income regardless of where they live. The U.S. government has no jurisdiction to tax Mr. Johnson because he has no income earned in the U.S. Reason: U.S. citizens are subject to U.S. taxation on their worldwide income regardless of where they live. The U.S. government has jurisdiction to tax Mr. Johnson. Reason: U.S. citizens are subject to U.S. taxation on their worldwide income regardless of where they live.

The U.S. government has jurisdiction to tax Mr. Johnson. Reason: U.S. citizens are subject to U.S. taxation on their worldwide income regardless of where they live.

Which of the following statements about an income effect of an income tax rate increase is false? The income effect motivates individuals to find ways to increase their before-tax income. The income effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner. The income effect is theoretically stronger for low-income taxpayers relative to high-income taxpayers.

The income effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner.

John earns $60,000 and pays $12,000 in income tax. Jenny earns $100,000 and pays $15,000 in income tax. Which of the following statements are true? (Select all that apply.) The tax system is not horizontally equitable. The information above provides no information with respect to horizontal equity. The tax system is not vertically equitable. The tax system might be considered vertically equitable. The information above provides no information with respect to vertical equity. The tax system is horizontally equitable.

The information above provides no information with respect to horizontal equity. The tax system is not vertically equitable.

John earns $40,000 and pays $4,000 in income tax. Jenny earns $100,000 and pays $20,000 in income tax. Which of the following statements are true? (Select all that apply.) The information above provides no information with respect to horizontal equity. The tax system is horizontally equitable. The tax system is not horizontally equitable. The information above provides no information with respect to vertical equity. The tax system might be considered vertically equitable. The tax system is not vertically equitable.

The information above provides no information with respect to horizontal equity. The tax system might be considered vertically equitable.

Jim and Jenny paid $50 to their county to obtain a marriage license. Choose the answer that best describes this payment. The payment best represents a tax because it was paid to a local government. Reason: Local governments assess both fees and taxes. This payment represents a user fee because it entitles the couple to a specific benefit. The payment best represents a user fee because it entitles the couple to a specific benefit (the right to marry). This payment does not represent a tax or a user fee.

The payment best represents a user fee because it entitles the couple to a specific benefit (the right to marry).

Which of the following statements about a sales tax is true? The seller is charged with collecting and remitting to the state government. Sales taxes can only be imposed on consumer goods. Reason: Sales tax can also be imposed on consumer services. Sales tax rates are consistent across all 50 states.

The seller is charged with collecting and remitting to the state government.

Which of the following statements about the substitution effect of an income tax rate is false? The substitution effect is theoretically stronger for self-employed individuals who control their own work schedule relative to employees. The substitution effect is theoretically stronger for low-income taxpayers relative to high-income taxpayers. The substitution effect is theoretically stronger for a family's secondary wage earner relative to the primary wage earner.

The substitution effect is theoretically stronger for low-income taxpayers relative to high-income taxpayers.

John earns $40,000 and pays $4,000 in income tax. Jenny earns $100,000 and pays $20,000 in income tax. Which of the following statements are true? (Select all that apply.) The information above provides no information with respect to vertical equity. The tax system is not vertically equitable. The tax system is not horizontally equitable. The tax system is horizontally equitable. The tax system might be considered vertically equitable. The information above provides no information with respect to horizontal equity.

The tax system might be considered vertically equitable. The information above provides no information with respect to horizontal equity.

Which of the following statements about Treasury Regulations is false? Treasury Regulations are part of statutory law. Reason: Treasury Regulations are part of administrative authority. A federal court can invalidate a Treasury Regulation if the court concludes that the regulation incorrectly interprets the Internal Revenue Code. Treasury Regulations are written to interpret and explain the Internal Revenue Code.

Treasury Regulations are part of statutory law.

True or false: A familiarity with current tax policy debates often allows business managers to anticipate and plan for changes in tax law. True False Reason: A familiarity with current tax policy debates often allows business managers to anticipate and plan for changes in tax law.

True

True or false: The U.S. government has the jurisdiction to tax individuals who are not U.S. citizens, but who are permanent U.S. residents. True False

True

True or false: Unemployment taxes are earmarked to provide monetary benefits to those who are temporarily out of work. True False Reason: Unemployment taxes are earmarked to provide monetary benefits to those who are temporarily out of work.

True

True or false: A tax on net income is an activity-based tax. True False

True Reason: A tax on net income is an activity-based tax.

Which of the following statements is false? In the U.S., the federal, state, and local governments commonly issue debt. Unlike other borrowers, the U.S. government does not have interest obligations on the debt it incurs. U.S. Treasury bills are short-term debt obligations issued by the federal government.

Unlike other borrowers, the U.S. government does not have interest obligations on the debt it incurs. Reason: Like any other borrower, the U.S. government is subject to interest payments. Failure to make its interest payments could result in debt default.

treasury regulation

Written by the Treasury to interpret and illustrate provisions of the Internal Revenue Code

Sales tax is an example of ______. an activity-based tax neither an activity nor a transaction-based tax a transaction-based tax

a transaction-based tax

A Revenue Ruling is part of ______. legislative authority judicial authority administrative authority

administrative authority

Assets defined as personalty ______. have increasingly been used as a source of tax revenue by state and local governments include real estate owned by an individual taxpayer become a more viable source of tax revenues when taxation is linked to a form of required registration or licensing

become a more viable source of tax revenues when taxation is linked to a form of required registration or licensing Reason: For example, registration of cars and boats.

Jurisdictional tax competition occurs ______. between states and between foreign countries only between foreign countries only between states

between states and between foreign countries

sales tax ability to pay is based on

consumption

True or false: Payment of a tax entitles the payer to specific goods and services. True False

false Reason: A tax differs from a user fee because payment of a tax does not entitle the payer to specific goods or services.

All states with a net income tax refer to the ______ definition of taxable income as a starting point for calculating state taxable income. most conservative Reason: Federal taxable income is the starting point for calculating state taxable income. federal state-specific Reason: Federal taxable income is the starting point for calculating state taxable income.

federal

VAT taxes are ______. (Select all that apply.) based on the total value of the good at each point in the production process Reason: VAT taxes are based on the incremental value that a firm adds to the good, rather than the total value. levied on firms engaged in the production process commonly observed in foreign jurisdictions

levied on firms engaged in the production process commonly observed in foreign jurisdictions

Bob earns $30,000 and pays $3,000 in tax. Charlie earns $50,000 and pays $5,000 in tax. Dylan earns $100,000 and pays $10,000 in tax. Which of the following best describe the tax structure? (Select all that apply.) Not vertically equitable Reason: The tax structure is proportionate since all taxpayers pay 10% regardless of the base. A proportionate tax structure is not vertically equitable. Vertically equitable Reason: The tax structure is proportionate since all taxpayers pay 10% regardless of the base. A proportionate tax structure is not vertically equitable. Regressive Reason: The tax structure is proportionate since all taxpayers pay 10% regardless of the base. Progressive Reason: The tax structure is proportionate since all taxpayers pay 10% regardless of the base. Proportionate Reason: The tax structure is proportionate since all taxpayers pay 10% regardless of the base. Concept ResourcesRead

not vertically equitable proportionate

Tax preferences are ______. (Select all that apply.) only granted through application to the taxing authority Reason: Tax preferences are tax incentives generally achieved by engaging in targeted activities. often quantified by the federal government and reported as indirect government expenditures economic incentives to engage in certain behaviors or activities intended to increase tax revenues Reason: Tax preferences often result in reduced tax revenues.

often quantified by the federal government and reported as indirect government expenditures economic incentives to engage in certain behaviors or activities intended to increase tax revenues

The U.S. federal income tax system is used to ______. (Select all that apply.) raise government revenues penalize taxpayers who have committed criminal acts address social issues address macroeconomic issues

raise government revenues address social issues address macroeconomic issues

States are permitted to enact legislation compelling online retailers to collect sales tax based on the ______. residence of the purchaser location of the retailers headquarters location of the warehouse that the product was shipped from

residence of the purchaser

The major advantage of state tax conformity to federal income tax law is ______. the ability to increase tax revenues Reason: simplicity it increases horizontal equity Reason: simplicity simplicity

simplicity

Which of the following statements describe supply-side economics? (Select all that apply.) It is widely held as the basis for the Tax Reform Act of 1986 championed by Ronald Reagan. The theory of supply-side economics is often seen as unfair because the focus is solely on benefiting low income taxpayers. The underlying theory is that increases in tax rates will provide the government with the funds necessary to provide additional services. Reducing tax rates is the basis by which supply-side economics serves to increase income-generating activities and stimulate the broader economy.

t is widely held as the basis for the Tax Reform Act of 1986 championed by Ronald Reagan. Reducing tax rates is the basis by which supply-side economics serves to increase income-generating activities and stimulate the broader economy.

An excise tax is best described as a ______. broad-based tax on retail goods tax on exports to foreign countries tax on a specific good or service

tax on a specific good or service

An excise tax is best described as a ______. tax on exports to foreign countries tax on a specific good or service broad-based tax on retail goods

tax on a specific good or service

Jurisdictional competition occurs because ______. (Select all that apply.) taxpayers are mobile and can often locate business in a variety of places corporations increasingly operate on a global scale not all jurisdictions tax at the same rate jurisdictions are required by international law to coordinate their tax systems

taxpayers are mobile and can often locate business in a variety of places corporations increasingly operate on a global scale not all jurisdictions tax at the same rate

Statutory authority refers to ______. case law Reason: the Internal Revenue Code opinions of a state tax revenue office Reason: the Internal Revenue Code the Internal Revenue Code

the Internal Revenue Code

Ms. White and Ms. Brown are both single and each earns $55,000 from her job. If their income tax obligation is similar and we consider only these facts, you could logically conclude that ______. (Select all that apply) the tax system is vertically equitable Reason: To be vertically equitable, you would need to demonstrate that those with greater ability to pay, pay more tax. In this example, both taxpayers have the same ability to pay. Therefore, we cannot assess vertical equity. the tax system is horizontally equitable they have similar ability to pay

the tax system is horizontally equitable Reason: They have similar ability to pay and pay the same tax. Therefore, you could conclude that the tax system is horizontally equitable. they have similar ability to pay

The tax base on which property taxes are levied is the ______. wealth of the owner Reason: The tax base is the value of the property. household net income Reason: The tax base is the value of the property. value of the property

value of the property

The tax base for Social Security and Medicare is ______. taxable income for an employee Reason: The base is wages or salaries for an employee. wages for a self-employed individual Reason: The base is net business income for a self-employed individual. wages for an employee

wages for an employee