Question 1

Currently, the Federal corporate income tax is less progressive than the individual income tax.

Accepted Answer

The Federal corporate income tax has a flat rate of 21%, while the individual income tax has a progressive rate that ranges from 10% to 37% depending on income level.

Question 2

Mona inherits her mother's personal residence, which she converts to a furnished rental house.These changes should affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

Converting the property to a rental house may result in a higher assessed value, which could affect the amount of ad valorem property taxes levied on the property.

Question 3

There is a Federal excise tax on hotel occupancy.

Accepted Answer

The Federal government does not impose an excise tax on hotel occupancy; such taxes are typically levied at the state or local level.

Question 4

Sales made by mail order are not exempt from the application of a general sales or use) tax.

Accepted Answer

Sales made by mail order are subject to the same sales or use tax requirements as in-person sales. Therefore, they are not exempt from the application of a general sales or use tax.

Question 5

The Federal estate and gift taxes are examples of progressive taxes.

Accepted Answer

The Federal estate and gift taxes are examples of progressive taxes, as the tax rate increases as the value of the estate or gift increases.

Question 6

A safe and easy way for a taxpayer to avoid local and state sales taxes is to make the purchase in a state that levies no such taxes.

Accepted Answer

The answer of A safe and easy way for a...

Question 7

The Federal excise tax on cigarettes is an example of a proportional tax.

Accepted Answer

A proportional tax is one in which the tax rate remains the same regardless of the taxpayer's income or ability to pay. The Federal excise tax on cigarettes is a specific amount per cigarette sold, making it a proportional tax.

Question 8

Even if property tax rates are not changed, the amount of ad valorem taxes imposed on realty may not remain the same.

Accepted Answer

The amount of ad valorem taxes can change due to changes in property values and assessments.

Question 9

Not all of the states that impose a general sales tax also have a use tax.

Accepted Answer

All states that have a general sales tax also impose a use tax to ensure that purchases made out of state for use within the state are taxed equivalently to in-state purchases.

Question 10

The Federal gas-guzzler tax applies only to automobiles manufactured overseas and imported into the U.S.

Accepted Answer

The Federal gas-guzzler tax applies to both domestically produced and imported automobiles that have low fuel economy.

Question 11

One of the major reasons for the enactment of the Federal estate tax was to prevent large amounts of wealth from being accumulated within the family unit.

Accepted Answer

The Federal estate tax was enacted as a way to prevent the concentration of wealth in the hands of a few families and to promote greater economic equality. By taxing the transfer of large estates from one generation to the next, the government aimed to redistribute wealth and limit the accumulation of dynastic wealth.

Question 12

The FICA tax Medicare component) on wages is progressive since the tax due increases as wages increase.

Accepted Answer

The Medicare component of the FICA tax is a flat rate tax, not progressive; it applies the same percentage rate to wages regardless of income level.

Question 13

An excise tax is often used to try to influence behavior.

Accepted Answer

An excise tax is a tax on specific goods or services, such as alcohol, tobacco, or gasoline. Governments often use excise taxes to try to discourage certain behaviors, such as smoking or driving. By making these goods and services more expensive, the hope is that people will consume less of them. So yes, an excise tax is often used to influence behavior.

Question 14

An inheritance tax is a tax on a decedent's right to pass property at death.

Accepted Answer

An inheritance tax is a tax on the beneficiaries' right to receive property from a decedent, not on the decedent's right to pass property at death.

Question 15

Two persons who live in the same state but in different counties may not be subject to the same general sales tax rate.

Accepted Answer

General sales tax rates can vary within a state based on local ordinances and county tax rates. Therefore, people living in different counties within the same state may be subject to different general sales tax rates.

Question 16

Like the Federal counterpart, the amount of the state excise taxes on gasoline varies from state to state.

Accepted Answer

The answer of Like the Federal counterpart, the amount of...

Question 17

States impose either a state income tax or a general sales tax, but not both types of taxes.

Accepted Answer

Some states impose both a state income tax and a general sales tax.

Question 18

On transfers by death, the Federal government relies on an estate tax, while states impose an estate tax, an inheritance tax, both taxes, or neither tax.

Accepted Answer

This statement is true. The Federal government imposes an estate tax on transfers by death, while states may impose an estate tax, an inheritance tax, both taxes, or neither tax depending on the state's tax laws.

Question 19

A fixture will be subject to the ad valorem tax on personalty rather than the ad valorem tax on realty.

Accepted Answer

A fixture, once attached to real property, is generally considered part of the real property and thus would be subject to the ad valorem tax on realty, not personalty.

Question 20

The ad valorem tax on personal use personalty is more often avoided by taxpayers than the ad valorem tax on business use personalty.

Accepted Answer

Personal use personalty, such as household items or personal vehicles, are often difficult to track and value for tax purposes, making it easier for taxpayers to avoid or underreport their value. On the other hand, business use personalty is often more closely scrutinized and tracked by the government, making it harder to avoid the ad valorem tax on these items.

Quiz 1: Introduction to Taxation