Question 1

The ratification of the Sixteenth Amendment to the U.S.Constitution was necessary to validate the Federal income tax on corporations.

Accepted Answer

The ratification of the Sixteenth Amendment to the U.S. Constitution was necessary to validate the Federal income tax on individuals, not just corporations.

Question 2

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

This is because taxpayers are more likely to use personal property for business purposes, and thus cannot avoid the ad valorem tax on business use personalty. On the other hand, personal use personalty may be more easily hidden or undervalued to avoid the tax.

Question 3

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 4

Currently,the Federal income tax is more progressive than it ever has been in the past.

Accepted Answer

The answer of Currently,the Federal income tax is more progressive...

Question 5

A Federal excise tax is still imposed on admission to theaters.

Accepted Answer

The answer of A Federal excise tax is still imposed...

Question 6

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 as sales made in person.

Question 7

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

Accepted Answer

State excise taxes on gasoline are not standardized and can vary in amount from state to state.

Question 8

Because the law is complicated,most individual taxpayers are not able to complete their Federal income tax returns without outside assistance.

Accepted Answer

The law governing Federal income taxes is complex and constantly changing. As a result, many individuals have difficulty completing their tax returns without help from professionals or tax software programs.

Question 9

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 10

Before the Sixteenth Amendment to the Constitution was ratified,there was no valid Federal income tax on individuals.

Accepted Answer

Before the Sixteenth Amendment, the Federal government did levy income taxes, notably during the Civil War period. However, the legality of a permanent income tax was challenged and led to the Supreme Court ruling in Pollock v. Farmers' Loan & Trust Co. (1895) that such taxes were unconstitutional if not apportioned according to state populations. The Sixteenth Amendment, ratified in 1913, explicitly allowed the Federal government to levy an income tax without apportionment among the states.

Question 11

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

Accepted Answer

Federal estate and gift taxes are based on the value of the estate or gift, so the more valuable the estate or gift, the higher the tax rate. This makes them progressive taxes.

Question 12

The pay-as-you-go feature of the Federal income tax on individuals conforms to Adam Smith's canon of certainty.

Accepted Answer

The answer of The pay-as-you-go feature of the Federal income...

Question 13

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 vehicles with low fuel efficiency ratings.

Question 14

The Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Accepted Answer

This is true. According to data from the IRS, in fiscal year 2019 the individual income tax generated $1.72 trillion in revenue, while the corporate income tax generated $230 billion.

Question 15

The first income tax on individuals (after the ratification of the Sixteenth Amendment to the Constitution)levied tax rates from a low of 2% to a high of 6%.

Accepted Answer

This statement is true. The first income tax on individuals, implemented in 1913 following the ratification of the Sixteenth Amendment to the Constitution, imposed rates from 1% to 7%, with a top rate of 7% on income above $500,000. However, the statement is also technically misleading, as it implies that the highest rate was only 6%.

Question 16

If property tax rates are not changed,the amount of ad valorem taxes imposed on realty will remain the same.

Accepted Answer

The answer of If property tax rates are not changed,the...

Question 17

Mona inherits her mother's personal residence,which she converts to a furnished rent house.These changes should not affect the amount of ad valorem property taxes levied on the properties.

Accepted Answer

Converting a personal residence into a furnished rent house typically results in an increase in property value, which can affect the amount of ad valorem property taxes levied on the property.

Question 18

There is no Federal excise tax on hotel occupancy.

Accepted Answer

The answer of There is no Federal excise tax on...

Question 19

The states that impose a general sales tax also have a use tax.

Accepted Answer

This is true. Most states that have a general sales tax also have a complementary use tax that is imposed on goods and services purchased from out-of-state sellers and used within the state. The purpose of the use tax is to ensure that residents are not able to avoid paying sales tax by purchasing goods or services from out-of-state vendors.

Question 20

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

Accepted Answer

Fixtures are considered part of real property and therefore are subject to the ad valorem tax on realty.

Quiz 1: An Introduction to Taxation and Understanding the Federal Tax Law