AC 750 Chapter 1

AC 750 Chapter 1 - Chapter 1 Introduction to Taxation Tax...

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Introduction to Taxation Chapter 1
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AC 750 - Chapter 1 2 Tax Liability Tax Base x Tax Rate = Tax Liability
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3 Assume that Nation X consists of only four honest, hardworking, single citizens who earned the following salaries (their only source of income) for 2011: Citizen A $12,000 Citizen B $25,000 Citizen C $50,000 Citizen D $100,000 Collectively, the citizens of X have decided that $30,000 of tax revenue is needed to provide public goods and services, national defense, etc. during 2011. Assuming that Nation X's economy and culture are very much like that of the United States, apportion the tax burden among X's citizenry in a manner that seems most equitable to you. Citizen A _________ Citizen B _________ Citizen C _________ Citizen D _________ Total $30,000 AC 750 - Chapter 1
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AC 750 - Chapter 1 4 Tax Rates Proportional - One rate applied to all tax base Progressive - increasing percentage applied to   increasing tax base Regressive – decreasing percentage applied to  increasing tax base Marginal - Rate of tax on the next dollar of income
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