Question 1

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

Accepted Answer

This statement is true. Each state sets its own excise tax rate on gasoline, which can vary widely from state to state.

Question 2

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

Accepted Answer

False

Question 3

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

Accepted Answer

States that have a general sales tax also impose a use tax, which applies to the use, storage or consumption of items purchased outside the state but used within its borders. This ensures that purchases made outside the state are not tax-free and that taxes are paid for the use of those items within the state.

Question 4

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 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 because they are based on the value of the estate or the amount of the gift, with higher value estates or larger gifts being subject to a higher tax rate.

Question 6

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 7

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 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 surrounding Federal income tax returns is complicated, and many individual taxpayers require outside assistance to complete their returns accurately.

Question 9

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

Accepted Answer

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

Question 10

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 tax laws as sales made in person at a physical location. Therefore, they are not exempt from the application of a general sales (or use)tax.

Question 11

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 to a rent house may affect the amount of ad valorem property taxes levied on the property, as rental properties are often assessed at a different rate than owner-occupied homes.

Question 12

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 13

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

Accepted Answer

According to data from the Congressional Budget Office, in 2020, individual income taxes made up 49% of total Federal revenue, while corporate income taxes made up only 7% of total Federal revenue. Therefore, the Federal income tax on individuals generates more revenue than the Federal income tax on corporations.

Question 14

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

Taxpayers are less likely to avoid paying the ad valorem tax on business use personalty as it is usually associated with equipment and assets that generate income for the business. In contrast, the tax on personal use personalty is often overlooked or disregarded by taxpayers as it applies to items that are not used for business purposes.

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 is true. The first income tax on individuals, passed in 1913, had tax rates ranging from 1% to 7% with a top rate of 7% applying to income over $500,000. However, the question is also technically correct as there was a subsequent adjustment to the rates in 1917 which lowered the top rate to 6%.

Question 16

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 domestic and imported automobiles that do not meet certain fuel efficiency standards.

Question 17

There is no Federal excise tax on hotel occupancy.

Accepted Answer

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

Question 18

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 19

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 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 the real estate property and are subject to the ad valorem tax on realty, not personalty.

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