What are consumption taxes - Andrews Manu ACC/497...

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Income Tax Fundamentals 2019
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Chapter 1 / Exercise 1.5
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified
Andrews Manu December 19, 2016 ACC/497 Professor Deborah 1. What are consumption taxes? : A consumption tax is a tax on spending on goods and services. The tax base of such a tax is the money spent on consumption. 2. Differentiate horizontal from vertical equity: Horizontal equity is individuals who have the same wealth, or as in the same income bracket, should face the same tax rate while vertical equity principle claims that wealthier people, or those with access to more resources, should pay higher taxes. 3. When was the constitutional amendment permitting an income tax ratified? : It was passed by congress on July 2, 1909, and ratified February 3, 1913, the 16 th amendment established congress’s right to impose a federal income tax. 4. What is a sin tax? : A sin tax is a state-sponsored tax that is added to products or service that are seen as vices, such as alcohol, tobacco and gambling. 5. What are three objectives of income taxation? : The three objectives of income taxation are as follows; 1. to raise government revenue for development and welfare programs in the country, to maintain economic equalities by imposing tax to the income earners and improving the economic condition of the general people and to encourage the production and distribution of the products of basic needs and discourage the production and harmful ones. 6. What are the three taxable persons that pay all of the income taxes? : The three persons that pay income taxes are the individuals, C-Corporations and fiduciary entity.
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Income Tax Fundamentals 2019
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Chapter 1 / Exercise 1.5
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified
7. What is the difference between gross revenue and gross income for a business? : Gross revenue for a business is the sum of all sales, whereas gross income is the difference between gross receipts and the company’s cost of goods sold.

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