Question 1

Fewer than half of the state governments depend on gambling as a source of revenue.

Accepted Answer

The answer of Fewer than half of the state governments...

Question 2

The federal government imposed the first income tax to raise money to fight the War of 1812.

Accepted Answer

The federal government imposed the first income tax in 1861 during the Civil War, not the War of 1812.

Question 3

Acme Inc.'s property taxes increased by $19,000 this year.As a result,Acme eliminated $19,000 from its budget for the employee Christmas party.Who bears the incidence of the corporate tax increase?

Accepted Answer

Acme's employees bear the incidence of the corporate tax increase because the funds that would have been used for their Christmas party were instead used to cover the additional tax expense.

Question 4

Both the U.S.House of Representatives and the U.S.Senate must vote to approve a new federal tax bill before the bill is signed into law by the President.

Accepted Answer

This is correct as per the process outlined in the U.S. Constitution. Both the House and Senate must pass identical versions of the bill, which then goes to the President for signature.

Question 5

The Internal Revenue Code is written by the Internal Revenue Service.

Accepted Answer

The Internal Revenue Code is actually written by Congress, not the Internal Revenue Service. The IRS is responsible for enforcing and administering the tax laws in the code.

Question 6

Acme Inc.'s federal income tax increased by $100,000 this year.As a result,Acme reduced the annual dividend paid on its common stock by $100,000.Who bears the incidence of the corporate tax increase?

Accepted Answer

The shareholders of Acme Inc. bear the incidence of the corporate tax increase as the reduction of annual dividend paid on its common stock is a direct consequence of the increase in federal income tax. The tax is ultimately paid by the shareholders in the form of reduced returns. Acme's customers and employees are not directly affected by the tax increase.

Question 7

Treasury regulations are tax laws written by the Treasury Department.

Accepted Answer

The answer of Treasury regulations are tax laws written by...

Question 8

The state of Virginia charges motorists 50 cents for every trip across a toll bridge over the James River.This charge is an example of a(n):

Accepted Answer

The charge for crossing the toll bridge is a user's fee, as it is directly tied to the use of a specific public infrastructure. It is not a tax on a product or activity, nor is it based on the quantity or frequency of use (like a transaction or activity-based tax). While it can be considered similar to an excise tax, which is a tax on a specific good or service, it is not technically an excise tax because it is not based on the production or sale of a good or service, but rather on the direct use of a public infrastructure.

Question 9

The federal government collects more revenue from the corporate income tax than from the individual income tax.

Accepted Answer

The federal government collects more revenue from individual income tax than from corporate income tax. In fiscal year 2019, the individual income tax generated over $1.7 trillion while the corporate income tax generated about $230 billion.

Question 10

According to the U.S.Supreme Court,states may require businesses to collect sales tax based on the residency of the purchaser.

Accepted Answer

In the case of South Dakota v. Wayfair, Inc. (2018), the U.S. Supreme Court ruled that states may require businesses to collect sales tax based on the residency of the purchaser, even if the business does not have a physical presence in the state.

Question 11

The potential for conflict among taxing jurisdictions is greatest for businesses operating on a global scale.

Accepted Answer

Businesses operating on a global scale are subject to taxation in multiple jurisdictions, which increases the chances of conflicting tax laws and regulations among various countries or states. This can lead to disagreements and disputes over tax liabilities and enforcement, resulting in potential conflicts.

Question 12

A business that operates in more than one state is required to pay state income tax only to the state in which it is incorporated.

Accepted Answer

A business that operates in more than one state is required to pay state income tax to each state in which it has "nexus" or a significant presence, not just the state in which it is incorporated. This concept is known as "state nexus" and can be a complex issue for multi-state businesses.

Question 13

Which of the following is not characteristic of a tax?

Accepted Answer

Taxes are not intended to punish unacceptable behavior; they are primarily a means for governments to raise revenue.

Question 14

The U.S.House Ways and Means Committee is responsible for drafting new federal tax legislation.

Accepted Answer

The U.S. House Ways and Means Committee is one of the most powerful committees in the House of Representatives and is responsible for drafting new federal tax legislation.

Question 15

The federal government does not levy property taxes or a general sales tax.

Accepted Answer

The federal government does not have the authority to levy property taxes or a general sales tax. These types of taxes are primarily handled by state and local governments. The federal government primarily funds itself through income taxes and other forms of revenue such as corporate taxes and tariffs on imported goods.

Question 16

The property tax on a rental house owned by Mr.Janey increased by $1,200 this year.Mr.Janey increased the monthly rent charged to his tenant,Ms.Lacey,by $45.Who bears the incidence of the property tax increase?

Accepted Answer

Both Mr. Janey and Ms. Lacey bear the incidence of the property tax increase. Mr. Janey faces increased costs, and Ms. Lacey faces increased rent, sharing the financial burden.

Question 17

The city of Mayfield charges individuals convicted of DWI (driving while intoxicated)$500 for the first conviction and $2,000 for any subsequent conviction.These charges are an example of a(n):

Accepted Answer

The charges imposed for DWI are a penalty set by the government on those who have violated the law. Therefore, the best choice is D, government penalty.

Question 18

The U.S.Constitution requires that federal tax legislation begins in the Senate.

Accepted Answer

Federal tax legislation can originate in either the House of Representatives or the Senate according to the Constitution. However, revenue bills must originate in the House of Representatives.

Question 19

Acme Inc.'s property taxes increased by $65,000 this year.As a result,Acme increased the sale prices of its products to generate $65,000 more revenue.Who bears the incidence of the corporate tax increase?

Accepted Answer

Acme's customers bear the incidence of the corporate tax increase because Acme increased the sale prices of its products to generate $65,000 more revenue. By raising prices, customers are paying more for the same product or service, resulting in a transfer of the burden from the company to the consumers.

Question 20

The U.S.Constitution gives the federal government the power to impose a tax on income from whatever source derived.

Accepted Answer

Article I, Section 8 of the U.S. Constitution grants Congress the power to "lay and collect taxes, duties, imposts and excises." This includes the power to impose a tax on income from any source.

Quiz 1: Taxes and Taxing Jurisdictions