ECON 1000 Lecture Notes - Lecture 10: Sales Tax, Tax Rate, Double Taxation

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30 Aug 2016

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Tax base- item or economic activity on which the tax is levied. Value of the tax base: personal, corporate, double taxation, payroll taxes, social security and medicare, consumption taxes, general sales tax, excise taxes, value added tax, tariffs, property taxes, others; gift, estate, poll, inflation. *we looked briefly at the percentage of the taxes that state governments and the federal governments collect, but you don"t need to know all of that, just at what it collected the most. Prof. langlois: almost all income tax rates are progressive in that the more you make, the more you are taxed. Prof. langlois: marginal tax rates are quite low right now. In 1918, there was a tax of 77% on income over million, for example, to help pay for the war efforts. Progressive tax- the fraction of income paid in taxes rises as income increases. Proportional tax- the fraction of income paid in taxes is constant.

Related Questions

46. In a proportional income tax system,

marginal tax rates increase as the level of taxable income increases.

marginal tax rates are the same regardless of the level of taxable income.

everyone pays the same dollar amount in taxes.

marginal tax rates decline as the level of taxable income declines.

47 A tax system that applies a lower marginal tax rate at higher levels of income is

backward.

regressive.

progressive.

proportional.

48 The average tax rate can be calculated by which of the following formulas?

The change in taxes due divided by the change in taxable income

The change in taxable income divided by the change in taxes due

Total taxable income divided by total taxes due

Total taxes due divided by total taxable income

49 Under a progressive income tax system, the marginal income tax rate paid by taxpayers

declines as their incomes increase

. is unrelated to their incomes.

rises as their incomes increase.

is unchanged as their incomes increase.

50 The tax base is the minimum amount of tax revenue that government must collect each year.

the maximum amount of tax revenue that government must collect each year.

the sum of all incomes earned in the United States.

the value of all goods, services, incomes, or wealth subject to taxation.

51 A capital gain is defined as the tax paid when one sells an asset.

the tax rate one pays when one moves into a higher tax bracket.

an unanticipated increase in income.

the positive difference between the sale price and the purchase price of an asset.

52 Corporate profits are

taxed twiceonce by the corporate tax system, and again by personal tax system when they are paid to stockholders as dividends.

taxed only when a stockholder sells his or her shares of stock.

taxed at too low a rate.

taxed three timesonce by the corporate tax system, again by the personal tax system, and again as capital gains.

53 Social Security taxes are regressive because

they apply only to rich people.

they are not applied to income beyond a certain amount.

they are applied to welfare recipients.

they are applied to retired people only.

54 The largest share of federal government tax receipts is derived from

excise taxes.

individual income taxes.

corporate income taxes.

social insurance contributions.

55 Local government expenditures depend on which taxes?

Social Security taxes

Local property, sales, and excise taxes

Capital gains taxes

Revenues from licenses and permits

56 When the purchase price of an asset is less than its sale price, then there is a

budget deficit.

corporate income tax.

capital gain.

capital loss.

57 The earnings that a corporation saves for investment in other productive activities are

transfers in kind. c

apital gains.

tax incidence.

retained earnings.

58 Tax incidence refers to

determining who sends the taxes into the government.

the distribution of tax burdens among groups, or who really pays a tax.

the tendency of some people to avoid paying taxes at all.

determining the marginal tax rate applied to any increase in income.

59 Social Security taxes are paid by

neither employers nor employees

both employers and employees.

employers only.

employees only.

ivoryfrog360

1. Do the math. Due to in-kind-transfers, 36 million more Americans were poor in 2010 than in 1965.

2. Which of the core choices that confront every nation is failing in the income distribution inequality? For whom

3. In a progressive tax system the marginal tax rate is the rate imposed on the last dollar of income.

4. If the tax elasticity of supply is 0.15, by how much will the quantity supplied decrease when the marginal tax rate increases from 35 to 45 percent?

Answer 3.8%

5. Had Obama succeeded in raising the top marginal tax rate (News, p. 417), how much more tax would he have paid in 2010? (Use the tax rates in Table 19.1 and the News on p. 415.)

Answer: 52,228.82.

6. What percentage of income is paid in Social Security taxes by a worker earning

(a) $40,000?

(b) $80,000?

(d) What kind of tax is this? (A: progressive; B: regressive; C: proportional)

Answers:

(a) __________.

(b__________.

(c____________.

(d) ____________

7. A nominal tax rate is tax paid divided by taxable income.

8. An effective tax rate is tax paid divided by total income.

The basis that describes the regressive tax burden of property taxes on the renter, who does not own property is tax incidence

violetgoat500

Taxable Income Range	Marginal Tax Rate
$0 to $10,000	12%
$10,001 to $24,500	18%
$24,501 to $68,000	27%
$68,001 and above	38%

The table shows the taxable income range and marginal tax rates for a single taxpayer in Oceania. There are no exemptions or deductions on personal income taxes in Oceania.

1. Refer to Table 20.1. The income tax paid by George, a single taxpayer with an income of $65,000, is

A.$11,100.

B.$14,745.

C.$15,345.

D.$17,550.

2.The table shows the taxable income range and marginal tax rates for a single taxpayer in Oceania. There are no exemptions or deductions on personal income taxes in Oceania.

Refer to Table 20.1. George is a single taxpayer with an income of $65,000. What is George's average tax rate?

A.19.00%

B.22.68%

C.23.61%

D.27%

3.Of the following countries, in which one was the true marginal tax rate faced by the typical worker lowest and the average number of hours worked per week highest from 1993 through 1996?

A.Italy

B.Canada

C.the United States

D.Germany

4.Unlike with Social Security taxes, there is no threshold on earnings beyond which the Medicare tax collection stops.

False

True

5.Which of the following expenditures is classified as a discretionary expenditure of the U.S. federalâ government?
A.food stamps

B.Social Security

C.federal employee pensions

D.student loans and grants

6.For the U.S. federal government, mandatory spending refers to
A.spending that is not subject to Congress's annual appropriations process.

B.spending on federal employee salaries.

C.spending that never changes in amount from year to year.

D.spending that must be authorized by Congress each year.

7.Based on the current state of revenue of the Social Security and Medicare programs, the government has two options for funding, which are

A.cutting payroll taxes or raising benefits.

B.cutting payroll taxes or cutting benefits.

C.raising payroll taxes or cutting benefits.

D.raising payroll taxes or raising benefits.

8.Which of the following would be classified as fiscal policy?
A.The Environmental Protection Agency enacts stricter air pollution regulations.

B.The Federal Reserve cuts interest rates to stimulate the economy.

C.The federal government cuts taxes to stimulate the economy.

D.States increase taxes to fund education.

9.Automatic stabilizers refer to

A.the money supply and interest rates that automatically increase or decrease along with the business cycle.

B.changes in the money supply or interest rates that are intended to achieve economic stability.

C.changes in federal taxes and purchases that are intended to influence economic activity.

D.government spending and taxes that automatically increase or decrease along with the business cycle.

10.The implementation lag for fiscal policy ________ it is for monetary policy.

A.can be much longer than

B.is usually the same as

C.is generally much shorter than

D.There is not an implementation lag for fiscal policy.

11.When government decides to increase spending, interest rates generally ________ and this change in interest rates ________ investment spending.

A.decrease; increases

B.increase; decreases

C.decrease; decreases

D.increase; increases

12.The marginal propensity to consume is the proportion of each newâ dollar's worth of income that is spent.

True

False

graygoat873

ECON 1000 Lecture Notes - Lecture 10: Sales Tax, Tax Rate, Double Taxation

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