ACC250 Chapter 1 Flashcards
(45 cards)
A tax based on the value of property.
ad valorem
A taxpayer’s average level of taxation on each dollar of taxable income.
ATR = total tax / taxable income
average tax rate
A subset (or portion) of the tax base subject to a specific tax rate. These are common to graduated taxes.
bracket
One of the criteria used to evaluate tax systems. This means taxpayers should be able to determine when, where, and how much tax to pay.
certainty
One of the criteria used to evaluated tax systems. This means a tax system should be designed to facilitate the collection of tax revenues without undue hardship on the taxpayer or the government.
convenience
The process of forecasting tax revenues that incorporates into the forecast how taxpayers may alter their activities in response to a tax law change.
dynamic forecasting
A tax assessed for a specific purpose (e.g., for education).
earmarked tax
One of the criteria used to evaluate tax systems. This means a tax system should minimize its compliance and administration costs.
economy
The taxpayer’s average rate of taxation on each dollar of total income (taxable & nontaxable income).
ETR = total tax / total income
effective tax rate
Taxes consisting of the Old Age, Survivors, and Disability Insurance (OASDI) tax, commonly called the Social Security tax, and the Medical health Insurance (MHI) tax (a.k.a. Medicare tax).
employment taxes
One of the criteria used to evaluate a tax system. A tax system is considered this if the tax is based on the taxpayer’s ability to pay; taxpayers with a greater ability to pay tax, pay more tax.
equity
A federal transfer tax. Based upon the fair market values of wealth transferred upon death.
estate tax
Taxes levied on the retail sale of particular products. They differ from other taxes in that the tax base for this tax typically depends on the quantity purchased rather than a monetary amount.
excise taxes
A tax directly imposed by a government.
explicit tax
A tax in which a single tax rate is applied through the tax base.
flat tax
A federal transfer tax. Based on the fair market value of the gift.
gift tax
Taxes in which the tax base is divided into a series of monetary amounts, or brackets, where each successive bracket is taxed at a different (gradually higher or gradually lower) percentage rate.
graduated taxes
One of the dimensions of equity. This is achieved if taxpayers in similar situations pay the same tax.
horizontal equity
Indirect taxes that result from a tax advantage the government grants to certain transactions to satisfy social, economic, or other objectives. They are defined as the reduced before-tax return that a tax-favored asset produces because of its tax-advantaged status.
implicit tax
One of the two basic responses that a taxpayer may have when taxes increase. This predicts that when taxpayers are taxed more (ex. tax rate increases), they will work harder to generate the same after-tax dollars.
income effect
A tax in which the tax base is income. These are imposed by the federal government and most states.
income tax
Taxes imposed by local governments.
local tax
The tax rate that applies to the next additional increment of a taxpayer’s taxable income (or to deductions).
MTR = (new total tax - old total tax) / (new taxable income - old taxable income)
marginal tax rate
The medical Health Insurance (MHI) tax. This tax helps pay medical costs for qualifying individuals. This tax helps pay medical costs for qualifying individuals. This tax rate for employees is 1.45% up to $200000 ($125k if filing separately; $250k married filing jointly). & is 2.35% in excess of $200k ($125k sep.;$250 mj). For employers, the tax rate is 1.45% regardless of amt of wages.
Medicare tax
