46. In a proportional income tax system, marginal tax rates increase as the leve
ID: 1203454 • Letter: 4
Question
46. In a proportional income tax system,
marginal tax rates increase as the level of taxable income increases.
marginal tax rates are the same regardless of the level of taxable income.
everyone pays the same dollar amount in taxes.
marginal tax rates decline as the level of taxable income declines.
47 A tax system that applies a lower marginal tax rate at higher levels of income is
backward.
regressive.
progressive.
proportional.
48 The average tax rate can be calculated by which of the following formulas?
The change in taxes due divided by the change in taxable income
The change in taxable income divided by the change in taxes due
Total taxable income divided by total taxes due
Total taxes due divided by total taxable income
49 Under a progressive income tax system, the marginal income tax rate paid by taxpayers
declines as their incomes increase
. is unrelated to their incomes.
rises as their incomes increase.
is unchanged as their incomes increase.
50 The tax base is the minimum amount of tax revenue that government must collect each year.
the maximum amount of tax revenue that government must collect each year.
the sum of all incomes earned in the United States.
the value of all goods, services, incomes, or wealth subject to taxation.
51 A capital gain is defined as the tax paid when one sells an asset.
the tax rate one pays when one moves into a higher tax bracket.
an unanticipated increase in income.
the positive difference between the sale price and the purchase price of an asset.
52 Corporate profits are
taxed twiceonce by the corporate tax system, and again by personal tax system when they are paid to stockholders as dividends.
taxed only when a stockholder sells his or her shares of stock.
taxed at too low a rate.
taxed three timesonce by the corporate tax system, again by the personal tax system, and again as capital gains.
53 Social Security taxes are regressive because
they apply only to rich people.
they are not applied to income beyond a certain amount.
they are applied to welfare recipients.
they are applied to retired people only.
54 The largest share of federal government tax receipts is derived from
excise taxes.
individual income taxes.
corporate income taxes.
social insurance contributions.
55 Local government expenditures depend on which taxes?
Social Security taxes
Local property, sales, and excise taxes
Capital gains taxes
Revenues from licenses and permits
56 When the purchase price of an asset is less than its sale price, then there is a
budget deficit.
corporate income tax.
capital gain.
capital loss.
57 The earnings that a corporation saves for investment in other productive activities are
transfers in kind. c
apital gains.
tax incidence.
retained earnings.
QUESTION 58 Tax incidence refers to
determining who sends the taxes into the government.
the distribution of tax burdens among groups, or who really pays a tax.
the tendency of some people to avoid paying taxes at all.
determining the marginal tax rate applied to any increase in income.
QUESTION 59 Social Security taxes are paid by
neither employers nor employees
. both employers and employees.
employers only.
employees only.
Explanation / Answer
Answer:
46. In a proportional income tax system, marginal tax rates are the same regardless of the level of taxable income. Say For. E.g.
47. A tax system that applies a lower marginal tax rate at higher levels of income is : backward
because a regressive tax is one that is inversely proportional to income — the lower the income, the higher the tax in relation to income , Proportional taxes apply the same tax rate to any income level and a progressive tax applies a higher tax rate to higher incomes.
48. The average tax rate can be calculated by which of the following formulas?
The average tax rate is calculated by : Total taxes due divided by total taxable income
49. Under a progressive income tax system, the marginal income tax rate paid by taxpayers : rises as the income increases.
50. The tax base is : the value of all goods, services, incomes, or wealth subject to taxation.
51. A capital gain is defined as the positive difference between the sale price and the purchase price of an asset.
52. Corporate profits are : taxed twice once by the corporate tax system, and again by personal tax system.
Double taxationoccurs because corporations are considered separate legal entities from their shareholders. As such, corporations pay taxes on their annual earnings, just as individuals do.
53. Social Security taxes are regressive because : they are not applied to income beyond a certain amount.
Further, Social Security taxes are regressive in that there is a cap so that higher income earners pay a lower proportion of their overall income than lower earning people.
54. The largest share of federal government tax receipts is derived from : Individual income taxes
55. Local government expenditures depend on which taxes? : Local property, sales, and excise taxes
56. When the purchase price of an asset is less than its sale price, then there is a : Capital Loss
57. The earnings that a corporation saves for investment in other productive activities are : Retained earnings.
58. Tax incidence refers to : the distribution of tax burdens among groups, or who really pays a tax.
59. Social Security taxes are paid by : both employers and employees.
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