Podcast
Questions and Answers
A tax is imposed on necessities, such as clothing or food.
A tax is imposed on necessities, such as clothing or food.
- Tax Incidence
- Tax Burden
- Economic Incidence
- Regressive Taxation (correct)
- Progressive Taxation
- Statutory Incidence
State and local taxes in a given state are 12% per household.
State and local taxes in a given state are 12% per household.
- Tax Burden (correct)
- Progressive Taxation
- Regressive Taxation
- Tax Incidence
- Economic Incidence
- Statutory Incidence
Residents of The Highlands apartments face rent increases because the owner's property taxes recently increased.
Residents of The Highlands apartments face rent increases because the owner's property taxes recently increased.
- Regressive Taxation
- Progressive Taxation
- Tax Incidence
- Economic Incidence (correct)
- Tax Burden
- Statutory Incidence
Property tax in a particular state is higher for owners of primary residences than for owners of agricultural properties.
Property tax in a particular state is higher for owners of primary residences than for owners of agricultural properties.
A tax is imposed on “passive” income such as shareholder dividends or interest earned on savings.
A tax is imposed on “passive” income such as shareholder dividends or interest earned on savings.
A retail business owner/operator must remit sales tax payments to the state Department of Revenue.
A retail business owner/operator must remit sales tax payments to the state Department of Revenue.
Flashcards
Regressive Tax
Regressive Tax
A tax that disproportionately affects lower-income individuals because they spend a higher percentage of their income on necessities.
Tax Burden
Tax Burden
The overall economic cost or percentage of income spent on taxes by households or individuals.
Economic Incidence
Economic Incidence
Refers to who ultimately bears the financial burden of a tax.
Tax Incidence
Tax Incidence
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Progressive Taxation
Progressive Taxation
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Statutory Incidence
Statutory Incidence
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Study Notes
- Taxation Scenarios and Correct Answers
Tax on Necessities
- A tax on necessities like clothing or food is a regressive tax.
- Regressive taxes disproportionately affect lower-income individuals.
- Lower-income individuals spend a higher percentage of their income on necessities.
State and Local Taxes
- State and local taxes at 12% per household is a tax burden.
- Tax burden measures the overall economic cost of taxes.
- Tax burden is the percentage of income spent on taxes by households or individuals.
Rent Increases Due to Property Taxes
- Rent increases due to increased property taxes on The Highlands apartments is an economic incidence.
- Economic incidence refers to who ultimately bears the financial burden of a tax.
- In this case, renters bear the burden through increased rent due to higher property taxes.
Property Tax on Primary Residences vs Agricultural Properties
- Higher property tax on primary residences than on agricultural properties in a state is a tax incidence.
- Tax incidence identifies how the tax burden is distributed among different groups.
- This includes primary residence owners versus agricultural property owners.
Tax on Passive Income
- A tax imposed on passive income like shareholder dividends or interest earned is progressive taxation.
- Progressive taxation imposes a higher tax rate on higher income levels.
- This aligns with the ability-to-pay principle.
Retail Sales Tax
- A retail business owner remitting sales tax payments to the state Department of Revenue is an example of statutory incidence.
- Statutory incidence refers to the legal obligation to pay a tax to the government.
- The retail business owner is legally responsible for collecting sales tax and remitting it.
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