Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. There was little government regulation of workplaces. To reduce pollution, the _____ legislates and enforces regulations that protect the air, water, and land. (Round earnings per share to the nearest cent.) A trade surplus is when a country produces more than it consumes, while a trade deficit happens when consumption exceeds production. As a result, lower-income people pay effectively the same rate as higher-income earners instead of lower ones. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Governments collect taxes to ensure that. Any tax decreases their ability to afford these basics. High-income earners use tax laws to their advantage to reduce their tax rates. regressive tax, tax that imposes a smaller burden (relative to resources) on those who are wealthier. On your diagram, show the consumer surplus derived from the purchase of Sparkle toothpaste. 37,379,699. questions answered. There were too few capable workers to fill positions. Solved TAXATION-MCQ-PART I Encircle the letter only | Chegg.com Melissa Horton is a financial literacy professional. Regressive Tax Definition | TaxEDU | Tax Foundation Which of these best describes the tax rates shown in the graph. \text { Gain on sale of investment } & 2,225 \\ personal income tax. jobs for women factory workers. 12. a. Losing weight is easy with Edgozene! They spent $19,952 on retirement savings and insurance. No, the federal income tax in the United States is progressive. b. the amount of money invested in the property. Sam Miller earned $63,000 last year. Regressive vs. Proportional vs. Progressive Taxes: What - Investopedia equal pay for owners and workers. Who is responsible if your tax preparer makes a mistake on your tax return? What is regressive tax? Definition and meaning \quad 17,000 \text { shares issued) } & 1,700,000 \\ Why is it not ideal to get a refund on your taxes each year? Determine the intensity x that gives the maximum Check all that apply. a tax. But how much of an impact they have depends on the tax system used and how much you make. While it may be fair in some instances to tax everyone at the same rate, it is seen as unjust in other cases. For example, the bottom 20 percent pay on average 17% of their incomes in state and local taxes. First, the tax takes a larger percentage of income. a tax for which the percentage of income paid in taxes decreases as income increases. This puts the effective tax rate at 12%. Incomestatementdata:Advertisingexpense$125,000Costofmerchandisesold3,650,000Deliveryexpense29,000Depreciationexpense-officebuildingsandequipment26,000Depreciationexpense-storebuildingsandequipment95,000Dividendrevenue3,575Gainonsaleofinvestment2,225IncomefromLifecareCo.investment65,600Incometaxexpense128,500Interestexpense19,000Interestrevenue1,800Miscellaneousadministrativeexpense7,500Miscellaneoussellingexpense13,750Officerentexpense50,000Officesalariesexpense165,000Officesuppliesexpense10,000Sales5,145,000Salescommissions182,000Salessalariesexpense365,000Storesuppliesexpense22,000\begin{aligned} Tariffsare excise taxes levied on imports. In the U.S., income taxes operate under a progressive system. a tax that charges high-income earners a lower percentage than low-income earners. If you sell your old car for more than you paid, the profit is subject to? Lose body fat and feel healthier with our proven supplement, Edgozene! As such, most income tax systems employ a progressive schedule that taxes high-income earners at a higher percentage rate than low-income earners, while other types of taxes are uniformly applied. The bonds are converted on December 31, 2020. Expert Answer. What is the most important source of tax revenue in Texas at the state level? What best describes a regressive tax? In 2023, federal progressive tax rates are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. d. Reducing spending, Which terms best describe sales tax? 5.5.2Test (CST): The Government Gets Involved, Depreciationexpense-officebuildingsandequipment, Depreciationexpense-storebuildingsandequipment. Where does Texas rank among the states in terms of residents with health insurance? ", Internal Revenue Service. A regressive tax takes the largest percentage of income from which group? It influences producers. State Income Tax vs. Federal Income Tax: What's the Difference? Here's how you would calculate your income tax burden in 2023: If you are filing as a single taxpayer, you pay 10% on the first $11,000 of income, 12% on any earnings between $11,001 and $44,725, 22% up until $95,375, and so on. The rate of assessment in Foster, Rhode Island, is 50%, and the tax rate is $11.29 per$1,000 of assessed value. A regressive tax system levies the same percentage on products or goods purchased regardless of the buyer's income and is thought to be disproportionately difficult on low earners. To fund government programs. 1 / 25. On December 31, 2016, the cost of the available-for-sale securities was $78,400\$ 78,400$78,400, and the fair value was $72,600\$ 72,600$72,600. However, they are not purely regressive in practice because they are based on the value of the property. ", The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Which Best Describes Why Governments Collect Taxes? - Micro B Life (2023) ", Internal Revenue Service. This is an example of Proportional vs. Progressive Taxes: What's the Difference? \end{array} Progressive taxes impose low tax rates on low-income earners and higher rates on those with higher incomes, while individuals are charged the same tax rate regardless of how much income they earn. & 8 & \text { SL } & 4,500 \\ For instance- A has income of $100 and B has income of. 0 Answers/Comments. A progressive tax imposes successively higher rates on taxpayers who have higher incomes. b. given up. Want to create or adapt books like this? expansionary, contractionary, or proportional, Monetary Policy: The Federal Reserve Quiz, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. Both impose a higher tax rate as income or value increases. Investopedia requires writers to use primary sources to support their work. a. increasing taxes. How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel? \end{aligned} \text { Cost of merchandise sold } & 3,650,000 \\ Which sentence best describes a regressive tax? a. Regressive taxes In computing earnings per share, assume that the average number of common shares outstanding was 84,000 and preferred dividends were $85,000. Inflation can result from rising demand and reduces the value of money. The tax on gasoline is a (n) The highest-earning fifth spent $114,840 that year. Although the fee is the same amount, it constitutes a more significant burden on the family with the lower income, again making it a regressive tax. Finally, proportional taxes result in everyone paying the same portion of their income in a tax. Technically, it's not a regressive tax because the rate is the same, but it does impose a greater burden on lower-income familiesthey end up reducing their spending on the basics to pay it. Somestates charge prisonersfees for health care. A(n) ____________ policy is employed when the government chooses to run a larger deficit. PDF Can Pennsylvania erase property taxes without wiping out education? This sort of system is meant to affect higher-income people more than low- or middle-class earners to reflect the presumption that they can afford to pay more. Examples of regressive taxes include sales taxes and property taxes, which are set at a flat percentage, regardless of who the purchaser or owner is. State Income Tax vs. Federal Income Tax: What's the Difference? options: The bulldozer operator costs $28 per hour in wages and benefits. Of that, they spent $12,317 on housing, $4,099 on food, and $4,363 on transportation. Customers will be charged$110 per hour for bulldozer work. This answer has been confirmed as correct and helpful. If the average rate of tax for all income earners is equal to their marginal rate of tax thenthe tax must be:A.Progressive.B.Proportional.C.Regressive.D.Indirect.10. Conclusion. It's regressive because lower earners are still paying the same percentage as higher earners. Which detail is most likely to give consumers a false sense of security about using Edgozene? And of course, this poor state financing penalty is highly regressive, with small firms paying & 22,000 \\ Which federal regulatory agency would most likely bring a civil suit against a business that broke securities laws? Incomestatementdata:AdvertisingexpenseCostofmerchandisesoldDeliveryexpenseDepreciationexpense-officebuildingsandequipmentDepreciationexpense-storebuildingsandequipmentDividendrevenueGainonsaleofinvestmentIncomefromLifecareCo.investmentIncometaxexpenseInterestexpenseInterestrevenueMiscellaneousadministrativeexpenseMiscellaneoussellingexpenseOfficerentexpenseOfficesalariesexpenseOfficesuppliesexpenseSalesSalescommissionsSalessalariesexpenseStoresuppliesexpense$125,0003,650,00029,00026,00095,0003,5752,22565,600128,50019,0001,8007,50013,75050,000165,00010,0005,145,000182,000365,00022,000, Retainedearningsandbalancesheetdata:Accountspayable$195,000Accountsreceivable543,000Accumulateddepreciationofficebuildingsandequipment1,580,000Accumulateddepreciation-storebuildingsandequipment4,126,000Allowancefordoubtfulaccounts8,150Available-for-saleinvestments(atcost)110,250Bondspayable,6%,due2022400,000Cash240,000Commonstock,$25par(400,000sharesauthorized;86,570sharesissued,82,670outstanding)2,164,250Dividends:Cashdividendsforcommonstock155,120Cashdividendsforpreferredstock85,000Stockdividendsforcommonstock62,800Goodwill510,000Incometaxpayable40,000Interestreceivable930InvestmentinLifecareCo.stock(equitymethod)689,100InvestmentinNordicWearInc.bonds(longterm)62,000Merchandiseinventory(December31,2012),atlowerofcost(FIFO)ormarket$780,000Officebuildingsandequipment4,320,000Paid-incapitalfromsaleoftreasurystock18,200Paid-incapitalinexcessofpar-commonstock842,000Paid-incapitalinexcessofpar-preferredstock150,000Preferred5%stock,$100par(30,000sharesauthorized;17,000sharesissued)1,700,000Premiumonbondspayable19,000Prepaidexpenses26,500Retainedearnings,January1,20128,708,150Storebuildingsandequipment12,560,000Treasurystock(3,900sharesofcommonstockatcostof$35pershare)136,500Unrealizedgain(loss)onavailable-for-saleinvestments(17,750)Valuationallowanceforavailable-for-saleinvestments(17,750)\begin{aligned} b. How are progressive taxes and regressive taxes similar? 1. Taxes may be variously described as progressive, proportional, or Instead, they would owe 10% on the first $11,000 of income, 12% on income from $11,001 to $44,724, and 22% for the amount over $44,725. Expert answered|capslock|Points 18614| Log in for more information. The Best Economic Policies Describe how tax incentives encourage global business. To give an idea, examples of regressive taxes are sales taxes and property taxes. In regressive taxes, the government collects a higher level of taxes from the low-income earners and a comparatively lower level of taxes from the high-income . The SEC generally oversees banking practices. Regressive taxessales taxes, property taxes, and sin taxesand proportional taxes have a greater impact on low earners because they spend more of their income on taxation than other taxpayers. f. A regressive tax is a tax imposed in such a manner that the average tax rate (tax paid personal income) decreases as the amount subject to taxation increases. Suppose there is a poll tax of 3,000 (paid regardless of income) In this case, the person earning 10,000 is paying 30% of their income in tax 3,000. It increases for high-income taxpayers in a progressive system. \text { Dividend revenue } & 3,575 \\ A proportional or flat tax system assesses the same tax rate on everyone regardless of income or wealth. This type of tax places more burden on low-income demographics rather than the high-income population. Which best describes the tax rate for the top 1%, as compared with the rates paid by the groups labeled next 10%, next 5%, and next 4%. Managing the distributional effects of climate policies: A narrow path Investopedia does not include all offers available in the marketplace. \text { Investment in Lifecare Co. stock (equity method) } & 689,100 \\ What is Payroll Tax and how much is it? | WeWork They are regressive because they raise the price of goods and services. Which of These Best Describes Income Tax - Kamari-has-Coleman c. Regressive taxes result in poor taxpayers paying no taxes. less money than an athletic trainer but will have an easier time finding a job. c. proportional tax. On January 1, 2016, Valuation Allowance for Available-for-Sale Investments had a zero balance. This kind of tax is a bigger burden on low-income earners than high-income earners, for whom the same dollar amount equates to a much larger percentage of total income earned. Taxes on most consumer goods, sales, gas, and Social Security payroll are examples of regressive taxes. an incentive. It is in opposition to a progressive tax, which takes a larger percentage from high-income earners. A tax that charges high-income earners a lower percentage than low-income earners. Which of the following terms best describes this tax? Which best describes why governments collect taxes? ", U.S. Energy Information Administration. The number of data points that illustrate the proper allocation of resources is . Chapter 4 Government and Global Business a price ceiling. So, among these option C) The more you make the higher amount you pay is the correct choice as it is calculated as a fixed % of income. Is sales tax proportional regressive or progressive? Thegasoline taxis a mildly regressive excise tax. It shows an inverse variation. A. Calculate the monthly payment and total closing costs for below choice. Key Takeaways. Added 98 days ago|11/15/2022 11:58:24 AM. Investopedia does not include all offers available in the marketplace. Taxpayers can elect to itemize deductions instead if this option results in a greater overall deduction. After all of the transactions for the year ended December 31, 2012, had been posted [including the transactions recorded in part (1) and all adjusting entries], the data below and on the following page were taken from the records of Everyday Products Inc. Both taxes are based on a percentage of a taxpayer's income rather than a flat tax rate, but the amount of the percentage increases for low-income taxpayers in a regressive system. Worksheet Solutions Comparing Regressive, Progressive, and Proportional Taxes Theme 3: Fairness in Taxes Lesson 5: How Taxes Affect Us Key Terms progressive taxA tax that takes a larger percentage of income from high-income groups than from low-income groups. B. A progressive tax rate imposes higher payments as income increases. Advantages. c. To end reliance on foreign goods to control the value of currency They favor people with high incomes and fall most heavily on people with low incomes. Some tax systems collect income taxes based on a progressive scheme, while others may utilize a proportional or regressive framework. No, government services could encourage growth but other practices could be more effective based on the economic situation. They only spent $610 on retirement savings and personal insurance. A typical work shift might be twelve to sixteen hours long. Labor unions were certain to advocate for the best interests of workers because. 3 Describe the differences between a regressive, progressive and flat tax. But here's how it plays out when it comes to calculating the taxes: 10 percent on income of $10,275 or less: $1,027.50 +. An individual's earnings above this base are not subject to the 6.2% Social Security tax. Which Of These Best Describes Income Tax Regressive Tax Indirect Tax Which statement is true concerning public school funding in Texas? (Best solution) The correct option is a): Regressive taxes place a higher burden on people who earn less compared to wealthier taxpayers. a. there is sufficient money to fund private businesses. This is a straight forward Power Point with 22 slides that outlines many topics that surround Personal Finance. \end{array} & \begin{array}{c} supply and demand. Which best describes a regressive tax? Tax that takes a larger percentage of a lower-income and a smaller percentage of a higher income is. Second, lower-income earners are more likely to smoke. Sales taxes are considered regressive taxes because the same rate of tax is charged to all consumers, no matter what their income level. It proposes a substantive canon of construction imperium urbis 15 15. The correct option is a): Regressive taxes place a higher burden on people who earn less compared to wealthier taxpayers. to reduce the number of responsibilities to make it easier to raise funds for expansion to move into a more favorable tax bracket. \text { Dividends: } & \\ d. Progressive The gas tax is also a Pigouvian tax (a tax on activities or items that can cause negative effects on others), with its own set of pros and cons.
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