Chapter 1 - Types of Taxes and the Jurisdictions That Use Them

Chapter 1 - Types of Taxes and the Jurisdictions That Use Them

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Definition of Tax Tax is not  a fine or penalty i.e.   it is not levied by  government to punish  unacceptable  behavior.   A fee  i.e. it is not levied as  payment for  particular goods or  services rendered by  the government. Tax is defined as being : A forced payment made to a governmental unit that is unrelated to the value of any specific goods or service provided by the government with the aim of financing public expenditure. Voluntary i.e.  it is obligatory. Ch.1: Types of Taxes and the Jurisdictions That Use Them
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Some Basic Terminology 1 A taxpayer: 2 is any person or organization required by law to pay  tax to a government authority. 3 The incidence of a tax: is the ultimate economic burden of a tax. Jurisdiction: is the right of a government to levy tax on a specific  person or organization. 4 A tax base: is an item, transaction, or activity with respect to  which a tax is levied and is usually expressed in  monetary terms. 5 The dollar amount of a tax: =   Tax Base    X    Tax Rate
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Types of Taxes State taxes Taxes levied  by  local government Taxes levied  by  state government Taxes levied  by  federal government Local taxes Federal taxes Wealth  taxes Consumption taxes Employment  and  unemployment  taxes Wealth  transfer  taxes Income  taxes
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Local Taxes Real property tax (Realty taxes) Personal property tax (Personalty taxes) Levied annually on  the ownership of realty owned by  individuals and businesses. Based on The market value of the real  property assessed by the tax  assessor Such as :               Land and Buildings Revenues of this tax are used by  local taxing jurisdiction for  supporting: - Schools. - Police and fire protection. Levied annually on  the ownership of personalty  (tangible and  intangible property)  owned by  individuals and businesses. Based on The fair market value of the tangible and  intangible property  assessed by individuals  and  businesses themselves  and  render (report) the value to tax assessor. Such as : -Individual's tangibles  (include: Automobiles, Recreational Vehicles, and Pleasure  Boats). - Business's tangibles  (include: Inventory, Furniture, Machinery, and  Equipments). -Business and individual's intangibles  (include: Stocks, Bonds, Notes receivable,  and other forms of business investment instruments). 
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State Taxes Use tax Excise tax Sales tax Levied on The retail sale of  consumer goods  and selected services 
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This note was uploaded on 02/01/2009 for the course ACTG 6610 taught by Professor Ward during the Spring '09 term at Middle Tennessee State University.

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Chapter 1 - Types of Taxes and the Jurisdictions That Use Them

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