Week 3 ACC 497 - Textbook 1 15 Krystal Bell ACC 497 Silvana...

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Textbook 1 - 15 Krystal Bell ACC 497 April 17, 2017 Silvana Moffitt
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. Consumption taxes are usually indirect, such as a sales tax or a value-added tax. Consumption taxes may take many forms, but the sales tax is the most common form in the United States. Almost all states levy sales taxes on some or all off the goods and services purchased, although certain items considered necessities may be exempt from tax. Differentiate horizontal from vertical equity. Horizontal equity, one of the key principles of tax fairness, asserts that persons in similar circumstances should face similar tax burdens. The difficult part is determining when different taxpayers are in similar circumstances. Vertical equity asserts that persons with higher incomes should pay not only more tax but also, higher percentages of their income as tax. Underlying this is the economic theory that income has diminishing marginal utility. In other words, as a person's income rises, each dollar is worth less to that person. When was, the constitutional amendment permitting an income tax ratified? Sixteenth Amendment, amendment (1913) to the Constitution of the United States permitting a federal income tax. The Sixteenth Amendment to the Constitution of the United States, ratified in 1913. What is a sin tax? A tax on items considered undesirable or harmful, such as alcohol or tobacco. A sin tax is a state- sponsored tax that is added to products or services that are vices, such as alcohol, tobacco and gambling. These types of taxes are levied by governments to discourage individuals from partaking in such activities without making the use of the products illegal. These taxes also provide a source of government revenue. What are three objectives of income taxation? To raise more revenue, to prevent Concentration of wealth in a few Individuals, To Boost the Economy What are the three taxable persons that pay all the income taxes?
Corporations, Fiduciaries or Estates and Trustees, Individuals What is the difference between gross revenue and gross income for a business? Gross revenue this what the business earns after selling their products that total amount of money the business make before expenses, while Gross Income this is business revenue less cost of goods it what business earns before sells and expenses have been deducted, it’s also known as gross profit, its calculated as (Gross Income = Total Revenue - Cost of good) What are at least three unique features of the individual tax model when compared to the corporate tax model? What are three similarities between these models?

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