ACC 331 Quiz 1 Flashcards
Explict tax
An involuntary payment required by the government that is unrelated to any specific benefit or service recieved from the government. Raise revenue
Tax liability calculation
Tax base x tax rate
Four kinds of tax bases
Transactions, property or wealth, privileges or rights, earned income
Average tax rate calculation
Tax liability/taxable income
Average tax rate
Used to express the average tax burden paid by a tax payer
Statutory marginal tax rate
Rate of tax that will be paid (saves) on an additional dollar of taxable income (deduction)
SMTR calculation
(New total tax-old)/(new TI-old)
Economic income
Taxable income-no tax income-non deductible expenses
Effective tax rate
Average rate of tax on all sources of income
ETR calculatiob
Total income tax/economic income
Effective marginal tax rate
Rate of tax that will be paid on the next dollar of economic income earned
EMTR calc
Change in tax/change in Econ income
Proportional tax
Marginal rate=average rate
Progressive tax
Marginal rate>average tax rate
Regressive tax
Marginal tax
Excise tax
Used as a deterant. Based on quantity rather than value
Sales and use tax
State and local. Based on selling price of good. Use prevent buying in a lower sales tax
Value added tax
Levied at each stage of the supply chain on the value added to the product
FICA taxes
All employers and employees pay taxes on wages earned by employees.
Self employment taxes
Individuals pay both the employer and employee portion of FICA taxes. Gets to deduct employee portion
Unemployment taxes FUCA
Employers pay 6% on the first 7000 on wages earned by each employee
Estate tax
Tax on right to transfer or recieve property upon death. Imposed on transferor (federal)
Inheritance tax
Imposed on the recipient (state)
Federal estate tax
Max rate is 40%. The first 5.49 million is excluded. Can transfer to surviving spouse
Gift tax
Annual exclusion is 14000 per donee (28000 married). Estate tax can be applied to gifts
Property taxes
Also called ad valorem tax
Realty
Land and anything permanently attached to the land such as buildings
Personal property
Anything other than land and building
Income taxes
Significant source for the federal government. Based on net taxable income
Income taxes paid by
Individuals, c corporations, trust and estates
Effective tax planning
Seeks to max after tax returns
Tax planning strategies
Shift from one period to another, shift from high bracket to lower, conversion from tax disadvantage o advantage
Shift period
Move income to low tax years, move deductions to high tax years
Shifting brackets
Move income low and deductions high
