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TAX 503 CHAPTER 1 TEST QUESTIONS AND ANSWERS
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TAX 503 CHAPTER 1 TEST QUESTIONS AND ANSWERS...
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Blade pays a tax of $5,000 on a taxable income of $50,000 while Cadenpays a tax of $12,000 on a taxable income of $100,000. What type of tax
rate structure appears to be in force? - ANSWER Progressive
A sales tax is an example of a tax that uses a(n), tax rate structure when
compared to its tax base. - ANSWER proportional
The social security tax is an example of a(n) tax structure because as
the tax base increases, the taxes paid increase, but the marginal tax rate
decreases. - ANSWER regressive
Steven and Sally have income from all sources (taxable and nontaxable)
totalling $140,286. Their taxable income is $114,966. Their tax liability is
$20,219. Their average tax rate is % (rounded to the nearest whole
number). - ANSWER 18%
The federal individual income tax system in the United States uses a(n)
tax structure. - ANSWER progressive
The tax rate is the best measure of the tax burden because it is the
average level of tax on all income from taxable and nontaxable sources.
The tax rate measures the average level of tax on only taxable income.
The tax rate indicates the rate of tax on the next additional increment of
income. - ANSWER effective, average, marginal
Blade pays tax of $5,000 on taxable income of $50,000 while Caden
pays tax of $10,000 on taxable income of $100,000. What type of tax
rate structure appears to be in force? - ANSWER Proportional
Which of the following taxes uses a regressive tax rate structure? -
ANSWER Social security tax
, Randall is single and has total income from all sources (taxable and
nontaxable) of $83,000. His taxable income is $62,000. Randall's tax
liability is $11,239. What is Randall's average tax rate? - ANSWER
18.13%
Which of the following federal taxes comprises the highest percentage
(almost half) of all tax revenues collected by the U.S. government? -
ANSWER Income tax
Which of the following taxes uses a progressive tax rate structure? -
ANSWER Federal individual income tax
Which of the following sentences describes the average tax rate? -
ANSWER The average level of taxation on each dollar of the taxpayer's
taxable income
Which of the following statements are correct regarding the history of the
U.S. personal income tax? (Check all that apply.) - ANSWER - The
16th Amendment to the U.S. Constitution gives Congress the power to
assess income tax on individuals.
- The income tax was once ruled unconstitutional.
Match the tax rate structure to its definition.
Regressive
Progressive
Proportional - ANSWER - Imposes a decreasing marginal tax rate as
the tax base increases
- Imposes an increasing marginal rate as the tax base increases
- Imposes a constant tax rate across the tax base
The social security tax is an example of a(n) tax structure because as
the tax base increases, the taxes paid increase, but the marginal tax rate
decreases. - ANSWER regressive
The federal estate tax is the MOST significant tax assessed by the U.S.
government because it generates more revenue for the government than
other types of federal taxes. - ANSWER False
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