Tax Exam 1
-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
