Question 1

The effective tax rate,in general,provides a better depiction of a taxpayer's tax burden than the average tax rate.

Accepted Answer

A) True 
 B)False

Question 2

In considering the "economy" criterion in evaluating tax systems,one must consider this criterion from both the taxpayer and the government's perspective.

Accepted Answer

A) True 
 B)False

Question 3

The 9ᵗʰ Amendment to the U.S.Constitution removed all doubt that a federal income tax was allowed under the U.S.Constitution.

Accepted Answer

A) True 
 B)False

Question 4

Oswald is beginning his first tax course and does not really have a solid understanding of the role that taxes play in various decisions.Please describe for Oswald the various types of decisions that taxes may influence.

Accepted Answer

The answer of Oswald is beginning his first tax course...

Question 5

Namratha has the choice between investing in a city of Watkinsville bond at 4.5% or a Moe's,Inc.bond at 7%.Assuming that both bonds have the same non-tax characteristics and that Namratha has a 25% marginal tax rate,in which bond should she invest? What interest rate offered by Moe's,Inc.would make Namratha indifferent between investing in the two bonds?

Accepted Answer

The answer of Namratha has the choice between investing in...

Question 6

Earmarked taxes are:

Accepted Answer

A)  Taxes assessed only on certain taxpayers. 
B)  Taxes assessed to fund a specific purpose. 
C)  Taxes assessed for only a specific time period. 
D)  Taxes assessed to discourage less desirable behavior. 
E)  None of the choices are correct.

Question 7

Which of the following is true?

Accepted Answer

A)  A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases. 
B)  Regressive tax structures are the most common tax rate structure. 
C)  An example of a regressive tax is an excise tax. 
D)  In terms of effective tax rates, a sales tax can be viewed as a regressive tax. 
E)  None of the choices are correct.

Question 8

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Accepted Answer

A) True 
 B)False

Question 9

Bart is contemplating starting his own business.His new business would operate as a sole proprietorship and would require hiring several employees.Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

Accepted Answer

The answer of Bart is contemplating starting his own business.His...

Question 10

The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true regarding use taxes?

Accepted Answer

A)  A use tax is relatively easy to enforce compared to a sales tax. 
B)  Use taxes attempt to eliminate any tax advantage of purchasing goods out of state. 
C)  Use taxes encourage taxpayers to buy goods out of state to avoid paying sales tax in their home state. 
D)  A use tax is generally a progressive tax. 
E)  None of the choices are correct.

Question 12

Taxes influence business decisions such as where a business should locate or how a business should be structured.

Accepted Answer

A) True 
 B)False

Question 13

The substitution effect:

Accepted Answer

A)  Predicts that taxpayers will work harder to pay for consumer products when tax rates increase. 
B)  Is one of the effects considered in static forecasting. 
C)  Results in the government collecting more aggregate tax revenue than under the income effect. 
D)  Is typically more descriptive for taxpayers with lower disposable income. 
E)  None of the choices are correct.

Question 14

Property taxes may be imposed on both real and personal property.

Accepted Answer

A) True 
 B)False

Question 15

Ariel invests $50,000 in a city of Las Vegas bond that pays 5% interest.Alternatively,Ariel could have invested the $50,000 in a bond recently issued by Jittery Joe's,Inc.that pays 8% interest with similar non-tax characteristics as the city of Las Vegas bond (e.g.,similar risk).Assume that Ariel's marginal tax rate is 25%.What is her after-tax rate of return for the city of Las Vegas bond? For the Jittery Joe's,Inc.bond? How much explicit tax does Ariel pay on the city of Las Vegas bond? How much implicit tax does she pay on the city of Las Vegas bond? How much explicit tax would she have paid on the Jittery Joe's,Inc.bond? Which bond should she choose?

Accepted Answer

The answer of Ariel invests $50,000 in a city of...

Question 16

Eliminating the current system of withholding income taxes directly from employee paychecks would:

Accepted Answer

A)  Violate the convenience criterion of federal taxation. 
B)  Increase the rate of compliance. 
C)  Make collection of federal income taxes easier. 
D)  All of the choices are correct. 
E)  None of the choices are correct.

Question 17

If Susie earns $750,000 in taxable income,how much tax will she pay as a single taxpayer for year 2017? (Use tax rate schedule in the text)

Accepted Answer

A)  $242.230.80 
B)  $252,500.00 
C)  $252,818.85 
D)  $269,615.40 
E)  None of the choices are correct.

Question 18

For each of the following,determine if each is a tax and why or why not.
a.$2.50 toll paid on the Florida Turnpike
b.$300 ticket for reckless driving
c.1% local surcharge on hotel rooms to fund public roadways
d.2% city surcharge on wages earned in the city of Philadelphia

Accepted Answer

The answer of For each of the following,determine if each...

Question 19

A 1% charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true regarding real property taxes and personal property taxes?

Accepted Answer

A)  Personal property taxes are assessed on permanent structures and land. 
B)  Real property taxes are assessed on cars and boats. 
C)  All U.S. states currently impose personal property taxes. 
D)  Real property taxes are generally easier to administer than personal property taxes. 
E)  None of the choices are correct.

Exam 1: An Introduction to Tax

The effective tax rate,in general,provides a better depiction of a taxpayer's tax burden than the average tax rate.

In considering the "economy" criterion in evaluating tax systems,one must consider this criterion from both the taxpayer and the government's perspective.

The 9ᵗʰ Amendment to the U.S.Constitution removed all doubt that a federal income tax was allowed under the U.S.Constitution.

Oswald is beginning his first tax course and does not really have a solid understanding of the role that taxes play in various decisions.Please describe for Oswald the various types of decisions that taxes may influence.

Earmarked taxes are:

Which of the following is true?

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.

Bart is contemplating starting his own business.His new business would operate as a sole proprietorship and would require hiring several employees.Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income.

Which of the following is true regarding use taxes?

Taxes influence business decisions such as where a business should locate or how a business should be structured.

The substitution effect:

Property taxes may be imposed on both real and personal property.

Eliminating the current system of withholding income taxes directly from employee paychecks would:

If Susie earns $750,000 in taxable income,how much tax will she pay as a single taxpayer for year 2017? (Use tax rate schedule in the text)

For each of the following,determine if each is a tax and why or why not. a.$2.50 toll paid on the Florida Turnpike b.$300 ticket for reckless driving c.1% local surcharge on hotel rooms to fund public roadways d.2% city surcharge on wages earned in the city of Philadelphia

A 1% charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local schools.

Which of the following is true regarding real property taxes and personal property taxes?