Solution Manual for Fundamentals of Taxation 2022 Edition 15th Edition

Solution Manual for Fundamentals of Taxation 2022 Edition 15th Edition Discussion Questions 1. (Introduction) Give a brief history of the income tax in the United States. Answer: The first federal income tax was enacted in 1861 to help finance the Civil War and was discarded soon thereafter. In 1894, another income tax was promulgated by Congress to raise additional tax revenue and to expand the sources of revenue. In 1895, the Supreme Court ruled that the federal income tax was unconstitutional. In 1913, the sixteenth Amendment to the U.S. Constitution was enacted. This amendment gave Congress the power to levy and collect taxes. In 2019, the federal government collected about $1.48 trillion in individual income taxes. Feedback: Learning Objective: Introduction Topic: Income tax history Difficulty: 1 Easy EA: No 2. (Introduction) For tax year 2019 what proportion of individual income tax returns was electronically filed? Answer: In 2019, electronically filed tax returns were about 94% of total returns. Feedback: Calculated from Table 1-1 Learning Objective: Introduction Topic: Income tax data Difficulty: 2 Medium EA: No 3. Name the three types of tax rate structures and give an example of each. Answer: Progressive – U.S. federal income tax Proportional – “flat-tax” usually levied on property or sales at the state or local level Regressive – Social security tax Feedback: Learning Objective: 01-01 Topic: Tax rate structure Difficulty: 1 Easy EA: No 4. What is a progressive tax? Why do you think the government believes it is a more equitable tax than, say, a regressive tax or proportional tax? Answer: A progressive rate structure is a structure where the tax rate increases as the tax base increases. The progressive rate structure is viewed as more equitable because the amount of tax paid varies with the ability to pay. For example, the government believes that as an individual makes more income, a smaller percentage of that income is needed to buy necessary living supplies and thus more income is available to pay taxes. Feedback: Learning Objective: 01-01 Topic: Tax rate structure Difficulty: 2 Medium EA: No 5. What type of tax is a sales tax? Explain your answer. Answer: The sales tax is a proportional tax. A proportional tax is a tax where the tax rate remains the same regardless of the tax base. Most county or state sales tax rates are the same regardless of the amount of sales upon which the tax is levied. With a proportional tax, the marginal tax rate and average tax rate are always the same. Feedback: Learning Objective: 01-01 Topic: Tax rate structure Difficulty: 1 Easy EA: No 6. What is the definition of tax base, and how does it affect the amount of tax levied? Answer: The tax base is the dollar amount upon which the tax rate is applied in order to determine the actual tax. Income, dollar sales, and property value are the more common tax bases in the United States. Feedback: Learning Objective: 01-01 Topic: Tax base Difficulty: 1 Easy EA: No