pg9 - evaluation of tax rate structures(31[LO4 LO5 Compare...

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evaluation of tax rate structures. (31) [LO4, LO5] Compare the federal income tax to sales taxes using the “certainty” criterion. Certainty means that taxpayers should be able to determine when to pay the tax, where to pay the tax, and how to determine the tax. It is relatively easy to determine when and where to pay the federal income tax and sales taxes. For example, individual federal income tax returns and the remaining balance of taxes owed must be filed with the Internal Revenue Service each year on or before April 15th (or the first business day following April 15th). Likewise, sales taxes are paid to retailers when items are purchased, and property taxes are typically paid annually to local governments. The ease of “how to determine the tax,” however, varies by tax system. Sales taxes are determined with relative ease – i.e., they are based on the value of taxable purchases. In contrast, income taxes are often criticized as being complex. What are taxable/nontaxable forms of income? What are deductible/nondeductible expenses?
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