#1
Which of the following is not a type of taxation?
Investment Tax
ExplanationTax on investments is typically categorized differently.
#2
What does VAT stand for in taxation?
Value Added Tax
ExplanationVAT is levied on the value added at each stage of production.
#3
Which of the following statements is true about progressive taxation?
It imposes a higher tax rate on higher incomes.
ExplanationProgressive taxation aims to redistribute wealth by taxing higher incomes more.
#4
What is the primary purpose of tax deductions?
To encourage certain behaviors or activities.
ExplanationTax deductions incentivize specific actions or investments.
#5
What is the term for a tax imposed on the transfer of property by inheritance?
Estate Tax
ExplanationEstate tax is levied on the transfer of wealth from deceased persons to their heirs.
#6
Which of the following is an example of an indirect tax?
Excise Tax
ExplanationExcise tax is collected indirectly through the sale of goods or services.
#7
What is the term for a tax that applies the same tax rate to every taxpayer, regardless of income or other factors?
Proportional Tax
ExplanationProportional tax imposes the same percentage of tax on everyone.
#8
What does FICA stand for in the context of taxation in the United States?
Federal Insurance Contributions Act
ExplanationFICA funds social security and Medicare programs in the US.
#9
Which of the following is an example of a regressive tax?
Sales Tax
ExplanationSales tax takes a higher percentage of income from low-income earners.
#10
Which tax form is typically used by individuals to file their income taxes in the United States?
Form 1040
ExplanationForm 1040 is the standard individual income tax form.
#11
Which of the following is considered a tax credit?
An amount subtracted directly from taxes owed
ExplanationTax credits directly reduce the amount of tax owed.
#12
What is the purpose of a sin tax?
To discourage behaviors deemed harmful to society
ExplanationSin taxes discourage consumption of harmful substances or activities.
#13
In the United States, which entity is responsible for collecting federal income taxes?
Internal Revenue Service (IRS)
ExplanationThe IRS collects federal income taxes in the US.
#14
What is the purpose of a tax treaty between countries?
To prevent tax evasion
ExplanationTax treaties aim to prevent double taxation and evasion.
#15
In the context of tax planning, what is the purpose of tax deferral?
To delay the payment of taxes to a later date
ExplanationTax deferral allows taxpayers to postpone tax payments until a later time.
#16
What is a tax haven?
A jurisdiction with favorable tax laws for non-residents
ExplanationTax havens offer advantageous tax treatments to non-residents.