Post 1 - C hapter 1 6 What is the definition of tax base...

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Chapter 1 6. What is the definition of tax base, and how does it affect the amount of tax levied? Tax base is the taxable income used to determine the amount of tax due. The tax base is used to determine the amount of tax to be levied. 9. Explain what is meant by regressive tax . Why the social security tax is considered a regressive tax? Regressive tax is when the rate decreases as the tax base increases. Social security is considered regressive because the rate for social security is 6.2% on the first $106,800 of wages in 2009. Once wages exceed $106,800, social security taxes cease. The rate drops from 6.2% to 0% as the tax base increases. 10. Define and compare these terms: average tax rate and marginal tax rate. The average tax rate is the percentage that a taxpayer pays in tax given a certain amount of taxable income. The marginal rate represents the proportion of tax the he or she pays on the last dollar of taxable income.
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