23 Questions
The process or means by which the sovereign, through its law-making body, raises income to defray the expenses of the government is:
Taxation
The proportional contribution by persons and property levied by the law-making body of the state for the support of the government and all public needs is referred to as:
Taxes
The primary purpose of taxation is:
To raise revenue for governmental needs
Which of the following is not a secondary purpose of taxation?
To raise revenue to defray the necessary expenses of the government
One of the characteristics of a tax is:
A tax is a pecuniary burden and the law may not allow payment in kind
Although the power of taxation is legislative in character, it is not the function of congress to:
Collect the tax levied under the law
The official action of an officer authorized by law in ascertaining the amount of tax due under the law from a taxpayer is:
Assessment
The actual effort exerted by the government to effect the exaction of what is due from the taxpayer is known as:
Collection
Deals with the provisions of the law which determine the person or property to be taxed, the sums to be raised, the rate thereof, and the time and manner of levying, receiving, and collecting taxes is:
Levy
All of the following, except one, are basic principles of a sound tax system:
Inherent in sovereignty
Under this basic principle of a sound tax system, the government should not incur a deficit:
Fiscal adequacy
The tax imposed should be proportionate to the taxpayer’s ability to pay is an example of:
Fiscal adequacy
The tax laws must be capable of convenient, just, and effective administration relates to which principle of a sound tax system:
Administrative feasibility
Which of the following may not raise money for the government:
Privatization of government’s capital assets
A tax must be imposed for public purpose. Which of the following is not a public purpose:
Improvement of a subdivision road
The power to demand proportionate contributions from persons and property to defray the expenses of the government is:
Power of taxation
The power of the state or those to whom the power has been delegated to take private property for public use upon paying to the owner a just compensation is known as:
Power of eminent domain
The power of the state to enact such laws in relation to persons and property as may promote public health, public morals, public safety, and the general welfare of the people is known as:
Police power
The following are similarities of the inherent power of taxation, eminent domain, and police power, except one:
Are legislative in implementation
Which of the following statements is not correct:
For the exercise of the power of taxation, the legislative branch is responsible
Suppose a special assessment is levied on persons, property, and rights while taxes are paid for the support of the government and arise from a contract. Which statement is true:
Only one statement is true
Based on specific and ad valorem categories, primary purpose, proportional, and progressive styles, which statement is true:
All statements are true
Regarding public finance, special assessments, taxes, and indirect vs. direct taxes, which statement is true:
All statements are true
Study Notes
Taxation
- Taxation is the process by which the sovereign, through its law-making body, raises income to defray the expenses of the government.
- It is a proportional contribution by persons and property levied by the law-making body of the state by virtue of its sovereignty for the support of the government and all public needs.
Primary Purpose of Taxation
- The primary purpose of taxation is to raise revenue for governmental needs.
Secondary Purposes of Taxation
- To encourage the growth of some industries through the proper use of incentives.
- To implement the police power of the State.
- To reduce excessive inequalities of wealth.
- To achieve social and economic stability.
Characteristics of a Tax
- A tax is levied by the state by virtue of its sovereignty.
- It is a pecuniary burden and the law may not allow payment in kind.
- It is not dependent upon the will or contractual assent, express or implied, of the person taxed.
Power of Taxation
- The power of taxation is basically legislative in character.
- It is not the function of congress to fix with certainty the amount of taxes, collect the tax levied under the law, identify who should collect the tax, or determine who should be subject to the tax.
Taxation System
- The taxation system consists of the levying and imposition of tax and the collection of tax.
- Assessment is the official action of an officer authorized by law in ascertaining the amount of tax due under the law from a taxpayer.
- Collection is the actual effort exerted by the government to effect the exaction of what is due from the taxpayer.
Sound Tax System
- Basic principles of a sound tax system include:
- Fiscal adequacy: the government should not incur a deficit.
- Theoretical justice or equality: the tax imposed should be proportionate to the taxpayer's ability to pay.
- Administrative feasibility: the tax laws must be capable of convenient, just, and effective administration.
Power of Eminent Domain and Police Power
- The power of eminent domain is the power of the state or those to whom the power has been delegated to take private property for public use upon paying to the owner a just compensation.
- The police power is the power of the state to enact such laws in relation to persons and property as may promote public health, public morals, public safety, and the general welfare of the people.
Comparison of Inherent Powers
- The inherent powers of taxation, eminent domain, and police power are similar in that they:
- Are necessary attributes of sovereignty.
- Interfere with private rights and property.
- Affect all persons or the public.
- Are not legislative in implementation.
This quiz covers the basics of taxation, including the definition and purpose of taxation, and the role of the government in levying taxes.
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