ch 3 connect

Question 1

Taxes are voluntary payments paid to a government for a specific benefit received by the specific taxpayer.

Answer 1

false-involuntary

Question 2

Jerry recently paid $20 in tolls for the Florida turnpike. The $20 payment is considered a tax.

Answer 2

false-this is a fine

Question 3

The federal income tax is an example of a regressive tax system.

Answer 3

false-progressive

Question 4

The marginal tax rate is often used in tax planning.

Answer 4

true

Question 5

The gift tax is imposed on the fair market value of items transferred upon death.

Answer 5

false- based on wealth transfers

Question 6

Horizontal equity means that two taxpayers with different amounts of income should pay different amounts of tax but fairly in relation to their ability to pay.

Answer 6

flase- this is vertical equity

Question 7

is -1% local surcharge on hotel rooms to pay for city government.- a tax

Answer 7

yes

Question 8

Which of the following is an example of a progressive tax system?

Answer 8

-individual income tax

Question 9

why is learning taxes important

Answer 9

-affects individuals, businessess, politicians

Question 10

aspects of business that require knowledge of taxation?

Answer 10

-where to locate businss
-what org form should the business use
-how the business should compensate its employees

Question 11

aspects of personal finance that require knowledge of taxation?

Answer 11

-choosing investments,
-performing gift or estate planning
- saving for educational expenses
- evaluating job offers.

Question 12

how do taxes affect the political process in the United States.

Answer 12

-presidential candidates distinguishing themselves based on tax rhetoric.

-Taxes also have an impact on the political process as voters will need a general understanding of taxes to evaluate and assess the merits of alternative tax proposals

Question 13

Courtney recently received a speeding ticket on her way to the university. Her fine was $200. Is this considered a tax? Why or why not?

Answer 13

No bc taxes are intended to generate revenue for govt operations, & fines are designed to punish/prevent behaviors, such as breaking the law by speeding, as in Courtney’s case.

Question 14

To help pay for the city’s new stadium, the city of Birmingham recently enacted a 1 percent surcharge on hotel rooms. Is this a tax? Why or why not?

Answer 14

yes-helps govt w their operations and not a benefit to hotel users

Question 14

Marlon and Latoya recently started building a house. They had to pay $300 to the county government for a building permit. Is the $300 payment a tax? Why or why not?

Answer 14

no- they receive a benefit from this

Question 15

As noted in Example 1-2, tolls, parking meter fees, and annual licensing fees are not considered taxes. Can you identify other fees that are similar?

Answer 15

-national park entrance fee
-public transportation fee
-dog registration

Question 16

how might one use average tax rate

Answer 16

Taxpayers might use the average tax rate in budgeting tax expense as a portion of income.

Question 17

how might taxpayer use effective tax rate

Answer 17

to provide a depiction of the taxpayer’s tax burden as it provides the taxpayer’s total tax paid as a ratio of the sum of taxable and nontaxable income.

Question 18

how might taxpayer use marginal income

Answer 18

tax planning

Question 19

Which is a more appropriate tax rate to use to compare taxpayers’ tax burdens—the average or the effective tax rate? Why?

Answer 19

effective tax rate

provides the taxpayer’s total tax paid as a ratio of the sum of both their taxable and nontaxable income.

Question 20

how to find current marginal rate

Answer 20

(% tax braket they r currently in)

Question 21

Song earns $112,000 taxable income and is taxed at an average rate of 20 percent ($22,400 of tax). Assuming that Congress increases the tax rate SO Song’s average tax rate increases from 20 to 25 %.

a. What will happen to the government’s tax revenues if Song chooses to spend more time pursuing her other passions besides work in response to the tax rate change and therefore earns only $84,000 in taxable income? AND WHAT IS THIS CALLED

What types of taxpayers are likely to respond in this manner?

Answer 21

Government’s tax revenues would decrease by $1,400

-substitution effect
-ones with more disposable income

Question 22

Taxes influence personal decisions such as whether to buy or rent a house.

Answer 22

true

Question 23

Sin taxes are:

Answer 23

taxes to discourage less desirable behavior.

Question 24

Employers often withhold federal income taxes directly from workers’ paychecks. This is an example of which principle in practice?

Answer 24

Convenience

Question 25

The difficulty in calculating a tax is typically in the determination of:

Answer 25

tax base

Question 26

Which of the following is true regarding use taxes?

Answer 26

Use taxes attempt to eliminate any tax advantage of purchasing goods out of state.

Question 27

tax assessed by a state or local government is

Answer 27

use tax

Question 28

A(n) x is defined as the reduced before-tax return that a tax-favored asset produces because of its tax-advantaged status.

Answer 28

implicit