Chapter 1 & 2: Quizlet

The city of Lamar imposes an income tax on businesses operating in its jurisdiction. The tax is 2% on income up to $300,000 and 3% on income in excess of $300,000. Spring Corporation generated $700,000 of income this year and is subject to $ of city income tax.

$18000 (300,000 x 2%) + ((300,000-700,000) x 3%)

Select all answers that accurately describe Social Security and Medicare.

-Federal Taxes -Earmarked taxes -Imposed on employees and self-employed individuals

Which of the following statements about property taxes are true?

-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.

Which of the following statements about designing a tax system is true

-The total tax revenues collected are a function of both the tax rate and the tax base. -Governments try to identify tax bases that cannot be easily concealed. -Real property is a good tax base because ownership is a matter of public record.

VAT taxes are ____ ____

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

Identify issues that contribute to jurisdictional tax competition.

2. Taxpayers are increasingly mobile and can relocate to a jurisdiction to secure a better tax situation. 3. Businesses increasingly operate on a global scale. 4. Taxing jurisdictions often overlap.

Which of the following statements about Treasury regulations is true

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.

Which of the following statements about a regressive rate structure is true?

A regressive rate structure is one in which the tax rate decreases as the base increases.

Which of the following is not a characteristic of a tax?

A tax is intended to punish unacceptable behavior.

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 that is vertically equitable is designed such that _blank​_.

A tax system that is vertically equitable is designed such that _blank​_.

Which of the following is the best example of an earmarked tax?

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

Which of the following statements does NOT describe the Keynesian standard of tax efficiency?

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

Which of the following statements best describes an equitable tax system?

An equitable tax system is both horizontally and vertically equitable.

Which of the following statements is not reflected in the current U.S. Federal tax system?

Appropriates private wealth from individuals in direct proportion to benefits provided to that same taxpayer.

County P levies a 10% excise tax on the purchase of boats. The annual revenue from this tax is $500,000 (10% of $5 million in boat sales). The county is considering increasing the excise tax to 12%. As a result, they anticipate that boat sales will fall to $4.5 million. Which of the following statements is true?

Based on a dynamic forecast, the rate increase will generate $40,000 in additional tax revenues. Dynamic Forecast: 12% × $4.5 million = $540,000 tax revenues which reflects a $40,000 increase.

The ____ _____ expenditures , Budget quantifies the revenue loss from each tax preference item.

Blank 1: Tax Blank 2: Expenditures

revenue ruling

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

Which of the following is a standard by which tax systems are typically evaluated?

Convenience Fairness sufficiency

Government officials of Country B are budgeting $25 million for public programs. At the same time, they estimate that tax revenues in Country B will be $22 million. Which conclusion can you draw, given these facts?

Country B's tax system is not sufficient.

____ _____ _____ of income" is the theory that presumes that as total income increases, the financial importance of each dollar of income decreases.

Declining marginal utility

The revenues from a(n) _____tax are designated to finance specific government expenditures.

Earmarked

The standard of a good tax has two seemingly competing definitions: it does not interfere or influence taxpayer economic behavior, and it induces taxpayers to deliberately change behavior in a desired direction. Identify the standard.

Efficiency

Payment of a tax entitles the payer to specific goods and services

False

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

False

True or false: The use of data analytics by tax professionals is uncommon.

False

rue or false: Tax theorists maintain that every tax should be evaluated on three standards: convenience, fairness, and sufficiency.

False

Which of the following Congressional Committees are involved in the tax legislative process? Select all that apply.

House Ways and Means Committee Senate Finance Committee Joint Conference Committee

Which of the following statements about methods for increasing tax revenues is

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.

To raise additional nontax government revenues, many states have resorted to legalized gambling in the form of

Lotteries casino

Which of the following federal taxes are earmarked for a specific purpose? (Select all that apply.)

Medicare Social Security

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 Proportionate

Which of the words below best describes the U.S. environment for taxation?

Pervasive and dynamic

Which does not represent an option for raising additional government funds to ensure that a tax system is sufficient?

Providing additional tax credits for low income taxpayers

Which tax structure tends to provide local governments with the greatest source of tax revenue?

Real property tax

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

Supreme court Appellate Court Trial Court

A strategy to increase tax revenues could involve either identifying a new or broadening an existing ____ ____

Tax Base

The ______ ______Budget quantifies the revenue loss from each tax preference item.

Tax Expenditures

Revenues and losses from tax preference items are quantified in the

Tax Expenditures Budget

Which statement about the federal tax law is true

Tax law is compiled in the Internal Revenue Code. Congress is responsible for passing tax legislation. The Internal Revenue Code of 1986 is the current version of the law under which we operate.

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 used as a tool for regulating the economy Tax policy used as a tool for regulating the economy

Which statement about tax policy is true?

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.

Congress amended the tax law to make it easier for individuals to file their income tax returns electronically. Which of the following statements is true?

The amendment is primarily intended to improve the convenience of the tax.

Which of the following statements is true about VAT taxes?

The budgets of many industrial nations depend heavily on the collection of VAT taxes.

Which of the following statements is false?

The public perception that the tax system is unfair has decreased in recent years.

Which of the following statements about a progressive tax rate structure is false?

The tax rate decreases as the tax base increases.

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 vertically equitable. The information above provides no information with respect to horizontal equity.

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

True

True or false: The optimal degree of progressivity in a tax rate structure tends to be a matter of political taste.

True

Which of the following statements is true?

When government expenditures exceed tax revenues, the tax system is sufficient.

treasury regulation

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

Big City levies a 4% tax on individual income. This year, Big City increased the individual income tax rate to 4.2%. The total tax base for the city is $110 million of taxable income. After the rate increase, the city anticipates that the tax base will decrease to $100 million. Which of the following statements are true? (Select all that apply.)

a [dynamic forecast: current tax revenues ( million x 4%)-Predicted (100 million x 4.2%)= 200,000 decrease.], b [static forecast: tax rate increase of 0.2% x existing tax base of $110 million = increase of $220,000]

John earned $20,000 of income and is subject to $2,000 of tax. Margaret earned $50,000 of income and is subject to $5,000 of tax. This tax can best be described as

a flat tax

Sales tax is an example of

a transaction-based tax

A revenue ruling is part of

administrative authority

Tax laws

are widespread and continually changing.

A tax system that encourages research and development expenditures is not a good tax, according to the ______ standard of tax efficiency.

classical

In the U.S., sales tax most commonly takes the form of a(n) _____ tax levied on the purchaser of the good.

consumption

sales tax

consumption

Jurisdictional competition occurs because ____

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

By one definition, a tax is _________if it does not interfere with or influence taxpayer economic behavior

efficient

Most state sales tax laws specifically exempt groceries and prescription drugs from sales tax because these are non-discretionary expenditures that reduce the purchaser's ability to pay. These provisions are designed to improve the _blank​_.

equity of the tax

True or false: The U.S. Federal tax system is largely seen as easy to understand and fair.

false

The Johns earn $100,000 and are subject to a 20% tax rate. They anticipate that tax rates will increase to 25% next year. Their response is to work harder and increase their before-tax income to $106,667. This response reflects _____ _____

income effect

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

income effect

In the United States, ___and _____ are the two primary entities subject to income.

individual corporations

A tax system that is horizontally equitable is designed such that _blank​_.

persons with the same ability to pay, pay the same tax

A tax structure in which a single rate is applied to all levels of the base is termed a(n) _______ tax rate structure.

proportional

legalized gambling

provides a nontax source of revenue to many state government budgets.

A graduated rate structure in which the rate decreases as the base increases is commonly referred to as

regressive

The social security tax is structured such that individuals pay social security tax annually on wages up to a defined threshold. They owe no additional social security tax once their wages exceed that threshold. Social security tax _blank​_.

regressive tax

Which of the following taxes could best be described as convenient from the taxpayer's perspective?

sales tax

The three basic sources of tax law are ____,____ and ______ authority.

statutory; administrative; judicial

The U.S. federal government has run a budget deficit every fiscal year from 1970 to 1999 as well as in several years since that time period. This is the best evidence that the U.S. tax system does not meet the standard of

sufficiency

a(n) ____ tax system generates enough funds to fund governement expenditures

sufficient

income tax

taxable income

Which of the following statements concerning judicial authority is true

the weight of authority of a particular case depends on the specific court rendering the decision. 2. Supreme Court decisions are the equivalent of law..

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 _blank​_. (Select all that apply)

they have similar ability to pay the tax system is horizontally equitable

True or False: The tax legislative process in the United States begins in the House of Representatives.

true

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

true

The incidence of sales tax levied on the purchase of retail goods is borne by the _blank​_.

ultimate consumer of the good

the tax base for Social Security and Medicare is

wages for an employee

transfer taxes

wealth