#1
Which of the following taxes is typically considered a regressive tax?
Sales tax
ExplanationSales tax tends to burden lower-income individuals disproportionately.
#2
What principle of taxation suggests that individuals or entities with higher incomes should pay taxes at higher rates?
Progressive tax
ExplanationProgressive tax implies higher taxation for higher incomes, reflecting ability to pay.
#3
What is the term for a tax rate that increases as the taxable amount increases?
Progressive tax
ExplanationA progressive tax system imposes higher rates on higher incomes.
#4
Which of the following is a characteristic of a proportional tax system?
Tax rate remains constant regardless of income
ExplanationIn a proportional tax system, the tax rate remains fixed regardless of income level.
#5
What is the term for a tax that applies the same rate of taxation to all taxpayers, regardless of income?
Flat tax
ExplanationA flat tax imposes a uniform tax rate on all taxpayers.
#6
What is the term for a tax on goods and services purchased by consumers?
Sales tax
ExplanationSales tax is levied on purchases made by consumers.
#7
What is the term for a tax that is imposed on the value of real property?
Property tax
ExplanationProperty tax is based on the assessed value of real estate.
#8
Which of the following statements is true regarding tax deductions?
They reduce taxable income
ExplanationTax deductions lower the amount of income subject to taxation.
#9
What is the primary purpose of excise taxes?
To discourage certain behaviors or consumption
ExplanationExcise taxes are used to discourage specific activities or consumption.
#10
What is the main objective of tax policy?
To generate revenue for the government
ExplanationTax policy aims primarily at funding government operations and services.
#11
Which of the following is NOT an example of a direct tax?
Sales tax
ExplanationSales tax is typically considered an indirect tax.
#12
What is the primary objective of using a tax credit?
To reduce tax liability directly
ExplanationTax credits directly decrease the amount of tax owed.
#13
Which of the following taxes is levied on the value of an estate or inheritance received by a beneficiary?
Estate tax
ExplanationEstate tax applies to the value of assets transferred upon death.
#14
Which of the following taxes is imposed on the transfer of assets during one's lifetime?
Gift tax
ExplanationThe gift tax is applied to transfers of assets during one's lifetime.
#15
Which of the following principles of taxation suggests that taxes should be levied in proportion to one's ability to pay?
Ability-to-pay principle
ExplanationThe ability-to-pay principle advocates taxing individuals according to their financial capability.
#16
What is the term for a tax system where individuals or entities with higher incomes pay taxes at a lower rate?
Progressive tax
ExplanationProgressive tax systems tax higher incomes at lower rates.
#17
Which of the following is NOT a characteristic of a good tax system?
Arbitrariness
ExplanationA good tax system avoids arbitrariness in its application.
#18
Which of the following is NOT a principle of a good tax system?
Convoluted
ExplanationA good tax system avoids complexity and convolution.
#19
Which of the following is NOT a factor influencing tax incidence?
Government regulations
ExplanationTax incidence is primarily affected by economic factors, not regulations.