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26 Cards in this Set
- Front
- Back
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Tax
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Involuntary/forced payment required by law unrelated to any specific benefit. (Doesn't include fines/penalties)
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Tax =
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Base x Rate
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Tax base
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Taxable Income
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Statutory Marginal Tax Rate=
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Tax paid/earned on the next dollar you will earn/deduct
MTR=(Change in Tax)/(Change in taxable income) Absolute value of (new-old) |
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Average Tax Rate=
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ATR gives you an idea of the tax burden for the year
(Total tax)/(Taxable Income) |
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Effective Tax Rate=
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Describes your economic "well-offness"
(Total Tax/Total Income) |
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Effective Marginal Tax Rate=
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(Change in Total Tax)/(Change in Total Income)
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Proportional (flat) tax
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Constant. For everything in the tax base, tax is the same.
Ex: Sales Tax |
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Progressive Tax
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Increasing MTR as the tax base increases. Direct relationship between tax base and tax rate.
-ATR<SMTR Ex: Income Tax |
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Regressive Tax
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Decreasing MTR as the tax base increases.
Indirect relationship between tax base and tax rate. -ATR>MTR Ex: Unemployment Tax |
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FICA taxes consist of...
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MHI and OASDI taxes
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Excise Tax
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Tax on quantity
-Ex: Gas |
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Income Tax
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Individuals and C-Corps pay income taxes. S-Corps don't pay income tax. Some estates and gifts.
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Unemployment Taxes
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-FUTA = 6.2% of first $7,000
-SUTA = 5.4% of first $7,000 Total can only combine to 6.2% usually employer charges the full 5.4%, government gets the remaining 8%. |
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Property Tax/Ad valorem. What is the tax base?
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The tax base is the assessed value of the property. Tax can be on real property (land and everything attached) and on personal property (car, etc.)
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Gift Tax Exemption
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I can give any person $13,000 in gifts before the $1,000,000 is touched. Annual Exemption.
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Sufficiency
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Assessing size of revenue and ensuring that the tax provides that dollar amount. Does the tax raise enough money?
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Horizontal Equity
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Two taxpayers in the same situations pay the same tax percentage.
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Vertical Equity
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If you have a greater ability to pay, then you pay more. The rate and the amount must both increase for it to be vertically equitable.
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What was wrong with the article about the cigarette tax in New York City?
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A cigarette tax is not an excise sax. It's a sales tax.
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After Tax Return=
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PTR(1-Tax Rate)
PTR is the Pre-Tax Return |
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Explicit Tax
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Taxes directly imposed by a government and are easily quantified
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Implicit Tax
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Indirect taxes. Not paid directly to government. They reduce the before tax return that a tax favored asset produces because of its tax-advantaged status.
They are measured by the pre-tax rate of return. |
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Certainty
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Should be able to determine when to pay the tax and where and how to determine the tax. April 15th. IRS.
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Convenience
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System designed to facilitate the collection of revenues without difficulty. The withholding system. Quarterly payments. W4-withholding.
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Economy
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System should minimize compliance and admin costs. IRS uses .5% of all revenues from tax
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