Income Tax Class 1-3
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Created by:
danielhandelman on September 15, 2011
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based on the first 3 classes
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19 terms
Terms | Definitions |
|---|---|
 Tax | tax rate X Tax Base |
| Tax Rate | level of taxed imposed on the tax base and is usually expressed as a % |
| Tax Base | income, property, goods or services that are subject to a tax |
| Marginal Tax Rate | the extra taxes paid on an additional dollar of income |
| Average Tax Rate | (Total Tax)/ taxable income |
| Effective Tax Rate | (Total tax)/ Total Income |
| proportional Tax Rate | A tax rate that remains the same, regardless of the size of the base |
| Progressive Tax Rate | tax system in which tax rates increase for higher incomes |
| Regressive Tax Rate | A tax rate that decreases as the size of the base increases |
| how do we evaluate different tax systems? | sufficiency, equity, certainty, convenience |
| Sufficiency | based on what the income of the government would actually have to be to fulfill their needs |
| Equity | who should pay more taxes? How the tax burden should be distributed across taxpayers |
| Horizontal Equity | The idea that taxpayers with similar abilities to pay taxes should pay the same amount |
| Vertical Equity | the idea that taxpayers with a greater ability to pay taxes should pay larger amounts |
| Statute of limitations | 3 years after the paperwork was turned in to collect your overpaid money |
| primary source | if it comes directly from one of the three branches of government |
| Secondary source | if it comes from any other source other than the three branches of government |
| income shifting | A technique used to reduce taxes in which a taxpayer shifts a portion of income to relatives in lower tax brackets |
| conversion strategy | The process by which the new system is introduced into the organization. Composed of Direct and Parallel conversion |
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