Question 1

While sales taxes are quite common,currently the U.S.federal government does not impose a sales tax.

Accepted Answer

A) True 
 B)False

Question 2

Marc,a single taxpayer,earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds.Using the U.S.tax rate schedule for year 2013,what is his average tax rate (rounded)  ?

Accepted Answer

A)  18.21%
B)  20.00%
C)  15.84%
D)  25.00%
E)  None of theseF) A) and B)
G) C) and E)

Question 3

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

Accepted Answer

A)  Convenience
B)  Certainty
C)  Economy
D)  Equity
E)  None of theseF) A) and D)
G) C) and E)

Question 4

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Accepted Answer

A) True 
 B)False

Question 5

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 these is trueF) B) and E)
G) B) and C)

Question 6

Fred and Wilma,married taxpayers,earn $100,000 in taxable income and $20,000 in interest from an investment in city of Bedrock Bonds.Using the U.S.tax rate schedule for married filing jointly for year 2013,how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate? If Fred and Wilma earn an additional $40,000 of taxable income,what is their marginal tax rate on this income? (Round the tax rates to 2 decimal places,e.g. ,.12345 as 12.35%)

Accepted Answer

Fred and Wilma will owe $16,857.50 in fe...

Question 7

A sales tax is a common example of a progressive tax rate structure.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Which of the following statements is true?

Accepted Answer

A)  Municipal bond interest is subject to explicit federal tax
B)  Municipal bond interest is subject to implicit tax
C)  Municipal bonds typically pay a higher interest rate than corporate bonds with similar risk
D)  All of these are true
E)  None of these is trueF) B) and D)
G) All of the above

Question 10

Jackson has the choice to invest in city of Mitchell bonds or Sundial,Inc.corporate bonds that pay 10% interest.Jackson is a single taxpayer who earns $50,000 annually.Assume that the city of Mitchell bonds and the Sundial,Inc.bonds have similar risk.Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 7.8%.How would you advise Jackson to invest his money?

Accepted Answer

A)  Invest in Sundial,Inc.bonds because their explicit tax is greater than the implicit tax on city of Mitchell bonds.
B)  Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on Sundial,Inc.bonds.
C)  Invest in Sundial,Inc.bonds because their explicit tax is less than the implicit tax on city of Mitchell bonds.
D)  Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on Sundial,Inc.bonds.
E)  None of thesE.Implicit tax on City of Mitchell bonds: 10% - 7.8% = 2.2%,Explicit tax on Sundial,Inc.bonds: 10% × .25 = 2.5%.F) None of the above
G) A) and B)

Question 11

Margaret was issued a $150 speeding ticket.This is:

Accepted Answer

A)  A tax because payment is required by law
B)  A tax because the payment is not related to any specific benefit received from the government agency collecting the ticket
C)  Not a tax because it is considered a fine intended to punish illegal behavior
D)  A tax because it is imposed by a government agency
E)  Not a tax because Margaret could have avoided payment if she did not speedF) A) and C)
G) C) and D)

Question 12

Taxes influence many types of business decisions but generally do not influence personal decisions.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a tax? I.A 1% special sales tax for funding local road construction.II.A fee paid to the state for a license to practice as an attorney.III.An income tax imposed by Philadelphia on persons working within the city limits.IV.A special property assessment for installing a new water system in the taxpayer's neighborhood.

Accepted Answer

A)  Only I is correct.
B)  Only IV is correct.
C)  Only III is correct.
D)  III and IV are correct.
E)  I and III are correct.F) A) and B)
G) A) and C)

Question 14

One benefit of a sin tax (e.g. ,a tax on cigarettes) is that it should increase the demand for the products being taxed.

Accepted Answer

A) True 
 B)False

Question 15

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 theseF) A) and C)
G) C) and E)

Question 16

Leonardo,who is married but files separately,earns $80,000 of taxable income.He also has $15,000 in city of Tulsa bonds.His wife,Theresa,earns $50,000 of taxable income.If Leonardo earned an additional $30,000 of taxable income this year,what would be the marginal tax rate (rounded)  on the extra income for year 2013?

Accepted Answer

A)  27.75%
B)  17.50%
C)  25.00%
D)  28.00%
E)  None of theseF) B) and E)
G) All of the above

Question 17

Which of the following is not one of the basic tax rate structures?

Accepted Answer

A)  Proportional
B)  Equitable
C)  Regressive
D)  Progressive
E)  All of these are different kinds of the basic tax rate structuresF) A) and D)
G) A) and E)

Question 18

To calculate a tax,you need to know: I.the tax base
II) the taxing agency
III) the tax rate
IV) the purpose of the tax

Accepted Answer

A)  Only I is correct
B)  Only IV is correct
C)  Only III is correct
D)  Items I through IV are correct
E)  I and III are correctF) All of the above
G) A) and B)

Question 19

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 20

Congress recently approved a new,bigger budget for the IRS.What taxation concept evaluates the cost of administering our tax law?

Accepted Answer

A)  Convenience
B)  Economy
C)  Certainty
D)  Equity
E)  None of theseF) A) and E)
G) A) and D)

Exam 1: An Introduction to Tax

Correct Answer
verified
Fred and Wilma will owe $16,857.50 in fe...
View Answer

Which of the following is not one of the basic tax rate structures?

Correct Answer
verified

Correct Answer
verified

A sales tax is a common example of a progressive tax rate structure.

Correct Answer
verified

One benefit of a sin tax (e.g. ,a tax on cigarettes) is that it should increase the demand for the products being taxed.

Correct Answer
verified

To calculate a tax,you need to know: I.the tax base II) the taxing agency III) the tax rate IV) the purpose of the tax

Correct Answer
verified

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

Correct Answer
verified

Marc,a single taxpayer,earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds.Using the U.S.tax rate schedule for year 2013,what is his average tax rate (rounded) ?

Correct Answer
verified

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Correct Answer
verified

Congress recently approved a new,bigger budget for the IRS.What taxation concept evaluates the cost of administering our tax law?

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

Margaret was issued a $150 speeding ticket.This is:

Correct Answer
verified

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

Correct Answer
verified

Taxes influence many types of business decisions but generally do not influence personal decisions.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Correct Answer
verified

While sales taxes are quite common,currently the U.S.federal government does not impose a sales tax.

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Exam 1: An Introduction to Tax

Correct AnswerverifiedFred and Wilma will owe $16,857.50 in fe...View AnswerShow Answer

Which of the following is not one of the basic tax rate structures?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A sales tax is a common example of a progressive tax rate structure.

Correct AnswerverifiedShow Answer

One benefit of a sin tax (e.g. ,a tax on cigarettes) is that it should increase the demand for the products being taxed.

Correct AnswerverifiedShow Answer

To calculate a tax,you need to know: I.the tax base II) the taxing agency III) the tax rate IV) the purpose of the tax

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Marc,a single taxpayer,earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds.Using the U.S.tax rate schedule for year 2013,what is his average tax rate (rounded) ?

Correct AnswerverifiedShow Answer

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Correct AnswerverifiedShow Answer

Congress recently approved a new,bigger budget for the IRS.What taxation concept evaluates the cost of administering our tax law?

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Margaret was issued a $150 speeding ticket.This is:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Taxes influence many types of business decisions but generally do not influence personal decisions.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

While sales taxes are quite common,currently the U.S.federal government does not impose a sales tax.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
Fred and Wilma will owe $16,857.50 in fe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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