What are the 2 components of taxes? - Tax rate and tax base
What are the 3 types of tax rates? - Proportional, progressive and regressive
Proportional Taxes - the rate of tax remains constant over the tax base (sales tax)
Progressive taxes - Tax rates increase as the tax base grows larger (Federal income,
gift and estate tax)
Regressive taxes - Tax rates decrease as the tax base grows larger (Federal
employment taxes such as FUTA and FICA)
What are the different tax bases? - Transactions, Property or wealth, Privileges and
rights, and income
What does Transaction taxes include? - sales and transfers of wealth
What does Property or wealth taxes include? - real estate taxes and ownership of
property
What does Privileges and rights taxes include? - the ability to use the corporate form or
to be in certain professions,excise taxes, and custom duties
What does Income taxes include? - gross or net income
After income taxes, what taxes usually affect more US taxpayers than any other type of
tax? - Transaction taxes
Taxes on the Production and Sale of Goods include? - Excise, Sales and Use and
Value added taxes
Excise taxes - levied by federal and state governments on exchanges of specified
commodities (oil, alcohol, phone service, and tobacco) or services.
Who are excise taxes levied on? - producers, resellers or consumers
Are excise taxes proportional, regressive or progressive? - Proportional they may vary
greatly from state to state.
What are Sales and Use Taxes? - Major source of income from most state and local
governments, and cover a broad base of transactions.
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