Tax Exam 1

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-from gov'ts view a good tax should be easy to administer -collection methods shouldn't overly intrude, but offer minimal opportunity for non-collection

convenience

Why do we pay taxes?

corrections of market failures, externalities, redistribution

taxes are __ bc the tax laws change so frequently

dynamic

a tax can be ____ so that tax is triggered only when an event occurs or transaction takes place

event or transaction based

T or F: a graduated system involves multiple tax rates that decrease as base increases

false

T or F: payment of a tax entitles payer to specific goods and services

false

Issues that contribute to jurisdictional tax competition

-businesses increasingly operate on global scale -taxing jurisdictions often overlap -taxpayers are increasingly mobile

a good tax should be:

-efficient -fair -convenient -sufficient

a tax can be described as ___ when imposed on cumulative result of an ongoing activity

activity based -taxpayers must maintain records of accounting, summary, results at periodic inervals and pay tax accordingly

a revenue ruling is part of:

administrative authority

accurately describe SS and Medicare

fed taxes, imposed on employees and self-employed individuals, earmarked taxes

sales tax base is

flat

income tax rate is

graduated

___: structure consisting of multiple percentages that apply to specified portions or brackets of the tax base

graduated rate

the ___ of a tax refers to the ultimate economic burden represented by the tax

incidence

an increase in income taxes may niduce people to engage in more income- producing activities

income effect

in US, ___ and ___ are two primary entities subject to income

individuals and crporations

statutory authority refers to:

internal revenue code

taxes are ___ bc they are so widespread, come in so many varieties, and affect virtually every aspect of modern life.

pervasive

3 basic sources of tax law are

statutory, administrative, and judicial authority

the possibility if increase income tax people may devote less time to income producing activities

substitution effect

a tax is __ if generates enoguh to pay for public goods and services provided by the gov't. If tax is __ the gov't can balance its budget

sufficient

faith in the sub effect is foundation for ____: holds that a decrease in the highest income taxes should ultimately result in an increase in government revenues

supply-side economic theory

a __ __ is an item, occurrence, transactions, or activity with respect to which a tax is levied

tax base

dollar amount of tax rate calculated by multiplying the base by the rate... formula:

tax(t)=rate(r)*base(b)

what gives the federal government the right to impose a tax on individual and corporate income?

the 16th amendment

-written to interpret and explain internal revenue code -a federal court can invalidate a treasury regulation if court concludes the regulation incorrectly interprets the internal revenue code

treasury regulations

T or F: tax structures are based on political and economic assumptions that are constantly evolving

true

T or F: the person who pays the tax to the government is not necessarily the person who bears the economic incidence of the tax

true

tax base for SS and Medicare is

wages for an employee


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