Tax Policy Notes Flashcards
(15 cards)
What is tax policy?
Tax policy refers to the government’s approach to taxation, including the rates, structure, and types of taxes imposed on individuals and businesses.
True or False: Tax policy can influence economic behavior.
True
Fill in the blank: The primary purpose of tax policy is to generate ______ for government spending.
revenue
What are the two main types of taxes?
Direct taxes and indirect taxes.
Multiple Choice: Which of the following is an example of a direct tax? A) Sales tax B) Income tax C) Value-added tax
B) Income tax
What is a progressive tax system?
A progressive tax system is one where the tax rate increases as the taxable amount increases.
True or False: Flat taxes charge the same rate regardless of income level.
True
What is tax evasion?
Tax evasion is the illegal act of not paying taxes owed, often by underreporting income or inflating deductions.
Multiple Choice: Which of the following is NOT a type of indirect tax? A) Excise tax B) Property tax C) Sales tax
B) Property tax
What is a tax credit?
A tax credit is an amount that taxpayers can subtract directly from the taxes they owe.
Fill in the blank: Tax ______ are deductions that reduce taxable income.
deductions
What is the purpose of tax incentives?
Tax incentives are designed to encourage specific economic behaviors, such as investment in certain sectors or activities.
True or False: Tax policy can be used as a tool for wealth redistribution.
True
What is the difference between tax avoidance and tax evasion?
Tax avoidance is the legal practice of minimizing tax liabilities, while tax evasion is illegal and involves not paying owed taxes.
Multiple Choice: Which term describes a tax that is assessed on the value of property? A) Income tax B) Estate tax C) Property tax
C) Property tax
