Topic 1 Tax Structures Flashcards
Fill in the blanks & select right option:
a _______ required by a __________ that is (unrelated )/(specific) to a benefit or service received from the government.
payment
government
unrelated
what is the basic formula for calculating tax?
tax = tax base x tax rate
what is tax rate?
the level of tax imposed on the tax base
what is tax base?
what is being taxed
the tax rate that applies to the next additional increment of a taxpayer’s taxable income is know as what?
marginal tax rate
the taxpayer’s average level of taxation on each dollar of taxable income is called what?
average tax rate
the taxpayer’s average rate of taxation on each dollar of total income (both taxable and non-taxable) is the what?
effective tax rate
formula for calculating the marginal tax rate
🔺tax/🔺income
formula for calculating the average tax rate
total tax/taxable income
formula for calculating the effective tax rate
total tax/total income
which tax rate provides the best depiction of the tax payer’s burden?
effective tax rate
what tax rate structure is constant tax rate throughout the tax base?
proportional or flat
what tax rate structure has an increasing marginal rate as the tax bas increases?
progressive
what tax rate structure has a decreasing marginal tax rate as the tax bas increases?
regressive
which tax rate structure do we currently have under the Tax Cuts & Jobs Act?
progressive
