Which best explains how contractionary policies can hamper economic growth? A progressive tax imposes a greater tax rate on higher-income brackets. The following best describes a regressive tax: a tax that charges high-income earners a lower percentage than low-income earners. First, the tax takes a larger percentage of income. The tax rate decreases as income increases. In lower-income families, a larger proportion of their income paysfor shelter, food, and transportation. A higher percentage and number of Texans lack health insurance than residents of any other state. What is the difference between inflation and deflation? Which best describes a regressive tax? A tax bracket is a range of incomes subject to a certain income tax rate. Both taxes are based on a percentage of a taxpayer's income rather than a flat tax rate, but the amount of the percentage increases for low-income taxpayers in a regressive system. b. The lowest-earning group paid the highest percentage of income in sales tax, while the highest-earning group paid at higher rates in income tax. d. Deflation can result from falling demand and reduces the value of money. Regressive tax progressive tax direct tax proportional tax Weegy. \end{array} A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases. Of that, they spent $12,317 on housing, $4,099 on food, and $4,363 on transportation. Social Security tax obligations are capped at a certain level of income called a wage base$147,000 for the 2022 tax year, rising to $160,200 in 2023. equal pay for owners and workers. 1 / 25. \text { Value } 2. An individual's earnings above this base are not subject to the 6.2% Social Security tax. This kind of tax is a bigger burden on low-income earners than high-income earners, for whom the same dollar amount equates to a much larger percentage of total income earned. expansionary, contractionary, or proportional, Monetary Policy: The Federal Reserve Quiz, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. Quintiles of Income Before Taxes: Annual Expenditure Means, Shares, Standard Errors, and Coefficients of Variation, Consumer Expenditure Surveys, 2020," Pages 1, 3, 6, 8. Under a flat tax, there are no special deductions or credits. a tax. Excise taxes are fixed and they're included in the price of the product or service. This is because they are taxed the same when consuming as higher earners$100 when shopping is worth more to a lower-tiered earner than it is to a higher-tiered earner, so taxes take more from them. Many states also levy them on certain services. The bulldozer is expected to operate for 1,500 hours per year for five years. The Best Economic Policies Centers for Disease Control and Prevention. The following chart illustrates the typical spending statistics by quintiles (fifths) of the population. What are common examples of program revenues? A tax rate is the percentage at which an individual or corporation is taxed. A change to any tax code that renders it less progressive is also referred to as regressive. Many low-income Americans pay no federal income tax at all because of tax deductions. Use the key terms to complete the following sentence: Rapidly rising, out-of-control prices are called ________________. Institute on Taxation and Economic Policy. Regressive tax refers to a tax which takes a greater proportion of low-wage individuals' income than from wealthier people. On what basis and over what periods of time did Coca-Cola and PepsiCo amortize their intangi ble assets? Discover more about the flat tax system here. The increases when the income is. Which best describes a regressive tax? As a result, lower-income people pay effectively the same rate as higher-income earners instead of lower ones. This puts the effective tax rate at 12%. a tax that charges low-income earners a lower percentage than high-income earnersB. The shareholders equity of MLS Enterprises includes $200 million of no par common stock and$400 million of 6% cumulative preferred stock. A trade surplus is when a country imports more than it exports, while a trade deficit happens when exports exceed imports. Which best describes Property tax? U. \text { Depreciation expense-store buildings and equipment } & 95,000 \\ Instead, the percentage you owe increases as your income gets higher. \text { Life (Years) } It exists because resources are scarce. Although the fee is the same amount, it constitutes a more significant burden on the family with the lower income, again making it a regressive tax. It is initiated at the national level, and passed on to consumers by businesses. "The property tax system is the most archaic and most regressive tax system that we have," he said in an email. hrc-ie-sogi@un.org or urgent-action@ohchr.org. less money than an athletic trainer but will have an easier time finding a job. Which States Dont Tax Social Security Benefits? Both are considered flat taxes. to control the value of currency Discover more about the flat tax system here. \text { Interest expense } & 19,000 \\ A progressive tax imposes successively higher rates on taxpayers who have higher incomes. Income Tax vs. Capital Gains Tax: Differences, How the TCJA Tax Law Affects Your Personal Finances, Marginal Tax Rate System: Definition, How It Works and Rates. Regressive. Before you prepare to read more about the challenges of globalization, consider what you know about it: a) What might be the benefits of globalization? Retainedearningsandbalancesheetdata:AccountspayableAccountsreceivableAccumulateddepreciationofficebuildingsandequipmentAccumulateddepreciation-storebuildingsandequipmentAllowancefordoubtfulaccountsAvailable-for-saleinvestments(atcost)Bondspayable,6%,due2022CashCommonstock,$25par(400,000sharesauthorized;86,570sharesissued,82,670outstanding)Dividends:CashdividendsforcommonstockCashdividendsforpreferredstockStockdividendsforcommonstockGoodwillIncometaxpayableInterestreceivableInvestmentinLifecareCo.stock(equitymethod)InvestmentinNordicWearInc.bonds(longterm)Merchandiseinventory(December31,2012),atlowerofcost(FIFO)ormarketOfficebuildingsandequipmentPaid-incapitalfromsaleoftreasurystockPaid-incapitalinexcessofpar-commonstockPaid-incapitalinexcessofpar-preferredstockPreferred5%stock,$100par(30,000sharesauthorized;17,000sharesissued)PremiumonbondspayablePrepaidexpensesRetainedearnings,January1,2012StorebuildingsandequipmentTreasurystock(3,900sharesofcommonstockatcostof$35pershare)Unrealizedgain(loss)onavailable-for-saleinvestmentsValuationallowanceforavailable-for-saleinvestments$195,000543,0001,580,0004,126,0008,150110,250400,000240,0002,164,250155,12085,00062,800510,00040,000930689,10062,000$780,0004,320,00018,200842,000150,0001,700,00019,00026,5008,708,15012,560,000136,500(17,750)(17,750), Divide the numbers and then round to the nearest hundredth. A regressive tax is a type of tax that is assessed regardless of income, in which low- and high-income earners pay the same dollar amount. Why do developing countries usually have less variety in their economic activities? Tax incentive b. tax amnesty c. tax exclusion d. tax exemption 24. It proposes a substantive canon of construction imperium urbis 15 15. Either through an online search or a review of the index, answer the question. Which best describes why governments collect taxes? D. Real average family income in the US barely changed for the poorest 20% of the population between 1979 and 2006, but income increased by 56.77% the richest 20% and by 87.47% for the richest 5%. A. Where does Texas rank among the states in terms of residents with health insurance? A progressive tax imposes successively higher rates on taxpayers who have higher incomes. User feesare regressive because they take a larger percentage of low incomes. Check all that apply. f(t)=e0.14te0.11(15t)f(t)=e^{0.14t}e^{0.11(15-t)} The percentage rate increases at intervals as taxable income increases. Rather, each person pays a set percentage on all income, making it a regressive tax. Any other tax that confers an advantage to wealthy individuals is regressive. \text { Income tax payable } & 40,000 \\ c. An executive order For example, if a high-income worker earned the limit by the end of September, they would not have to pay any more payroll tax for the rest of the yearin contrast to a worker who earns $50,000, who pays throughout the year. a. What Is Income Tax and How Are Different Types Calculated? The Tax Cuts and Jobs Act: What Did It Mean for You? The U.S. has a progressive tax system. The PPT includes sections on banking, credit, taxes, loans, health care, insurance and much more.Most slides have a picture or graph. Cumulative Exam Review. The decision to issue a stock dividend resides with shareholders. \quad \text { Cash dividends for preferred stock } & 85,000 \\ \text { Retained earnings, January 1, 2012 } & 8,708,150 \\ f(t)=e0.14te0.11(15t), Paid to state and local governments on purchased goods and services, Paid to state or local governments based on the assessed value of property, Paid by businesses or individuals on money they make, The largest source of tax revenue for the federal government is, One in which the tax rate increases as the amount of taxable income increases. It's regressive because lower earners are still paying the same percentage as higher earners. The correct answer is income tax is a direct tax. Regressive taxes may seem fair because they are imposed on everyone regardless of income, but they hurt low-income earners more than others. Direct Would be good for an economics or math class. Which of these best describes income tax? Taxes on most consumer goods, sales, gas, and Social Security payroll are examples of regressive taxes. What information is contained in a payoff table? C) A tax that takes a fixed percentage of income regardless of the taxpayer's level of income. a. Employers are responsible for paying 6% of the first $7,000 of each employee's wages. As with any government policy, progressive tax rates have critics. c. proportional tax. They spent $19,952 on retirement savings and insurance. Which is not used by the IRS to collect taxes? b. given up. Laws passed by Congress This table compares the requirements for a career as an athletic trainer or an air traffic controller. owned by their employees. \text { Accumulated depreciation-store buildings and equipment } & 4,126,000 \\ Look at the table below showing an example of a checkbook ledger. "How Much Tax Do We Pay on a Gallon of Gasoline and on a Gallon of Diesel Fuel? our proven supplement A regressive tax takes a higher proportion of earningsfrom lower-income households than those with higher incomes. 2 question Which of these best describes income tax. \text { Sales salaries expense } & 365,000 \\ Calculate the monthly payment and total closing costs for below choice. Losing weight is easy with Edgozene! The term regressive tax means taxes that take a larger proportion of the income from lower earners than from higher earners. Provide some examples of each in Canada. 1. By omitting these taxes from food, shelter, and health costs, they become less burdensome on lower-income earners. The first tax rate of 10% applies to incomes of less than $11,000 for single individuals and $22,000 for married couples filing joint tax returns. Get the detailed answer: Which best describes a regressive tax?A. A reason that countries trade with each other is. A trade surplus is when a country exports more than it imports, while a trade deficit happens when imports exceed exports. A regressive tax is one thatimposes a harsher burden on lower-income households than on households with higher incomes. A tax that charges high-income earners a lower percentage than low-income earners. Proponents of proportional taxes believe they stimulate the economy by encouraging people to work more because there is no tax penalty for earning more. A tax that takes a fixed percentage of income regardless of the taxpayer's level of income. Selected transactions completed by Everyday Products Inc. during the fiscal year ending December 31, 2012, were as follows: j. Nottebart Corporation has outstanding 10,000 shares of $100 par value, 6% preferred stock and 60,000 shares of$10 par value common stock. Which statement is true concerning public school funding in Texas? Higher-income families, on the other hand, have no problem affording the basics. Each dollar the individual earns places him into a bracket or category, resulting in a higher tax rate once the dollar amount hits a new threshold. \text { Goodwill } & 510,000 \\ What is the amount of dividends common shareholders will receive in 2021? It is in opposition to a progressive tax, which takes a larger percentage from high-income earners. \quad 17,000 \text { shares issued) } & 1,700,000 \\ \text { Paid-in capital from sale of treasury stock } & 18,200 \\ If the Texas legislature creates a separate fund within the General Revenue Fund exclusively intended for ADA compliance measures, what type of fund have they created? options: b. indirect tax. Regressive taxes place more burden on low-income earners. \text { Treasury stock (3,900 shares of common stock at cost of } & \\ Use the companies' financial information to answer the following questions. \text { Valuation allowance for available-for-sale investments } & (17,750)\\ Which of the following statements best describes regressive taxes?, The Texas Constitution was amended in 2019 to prohibit which tax?, When Texas legislators are reluctant to raise taxes, how do they finance government services for the general public? A sales tax is a type of Once the recipient and their dependent spouse dies no more money is paid. The Internal Revenue Service (IRS) considers these taxes to be regressive, because, once again, they are more burdensome to low-income earners rather than their high-income counterparts. Suppose C = 1000 + .5YD, and the government collects 10% of all consumption expenditures in . Choice 2: 303030-year fixed rate mortgage at 3%3 \%3% with closing costs of $1500\$ 1500$1500 and 444 points, Sparkle is one of the many firms in the market for toothpaste, which is in long-run equilibrium. to take advantage of little government oversight., A business owner would most likely create a cooperative instead of buying a franchise . There were too few capable workers to fill positions. State Income Tax vs. Federal Income Tax: What's the Difference? Often tossed around in debates about income tax, the phrase "flat tax" refers to a taxation system in which the government taxes all income at the same percentage regardless of earnings. As such, most income tax systems employ a progressive schedule that taxes high-income earners at a higher percentage rate than low-income earners, while other types of taxes are uniformly applied. Technically, it's not a regressive tax because the rate is the same, but it does impose a greater burden on lower-income familiesthey end up reducing their spending on the basics to pay it. two bottles for $29.95 Which of the following terms best describes this tax? The overall outcome is that higher earners pay a higher percentage of taxes and more money in taxes than do lower-income earners. They favor people with high incomes and fall most heavily on people with low incomes. No other diet pill offers what our product does and, if you buy now, you can get two bottles of Edgozene for just $29.95! Retainedearningsandbalancesheetdata: Accumulateddepreciationofficebuildingsandequipment, Accumulateddepreciation-storebuildingsandequipment. Commonstock,$25par(400,000sharesauthorized; InvestmentinLifecareCo.stock(equitymethod), InvestmentinNordicWearInc.bonds(longterm), Merchandiseinventory(December31,2012),atlower, Paid-incapitalfromsaleoftreasurystock, Paid-incapitalinexcessofpar-commonstock, Paid-incapitalinexcessofpar-preferredstock. Proportional b. regressive c. progressive d. constructive 25. A flat tax system applies the same tax rate to every taxpayer regardless of their income bracket. B. "U.S. Alcohol Consumption on Low End of Recent Readings. taking tax payments out of an employee's pay before he or she receives it. d. reducing spending. & 8 & \text { SL } & 4,500 \\ They are regressive because they raise the price of goods and services. "Questions and Answers for the Additional Medicare Tax.". The 86th Legislature increased state support for public schools through various funding programs. See answers. The structural component of the budget outcome is affected by:A.Non-discretionary fiscal policy changes.B.Discretionary fiscal policy changes.C.The operation of automatic . A progressive tax rate imposes higher payments as income increases. Which of the following is true of a stock dividend? How are progressive taxes and regressive taxes similar? The City of Danmark is preparing financial statements. for a limited time a. the property owner's income. All of the following except one, are kinds of taxes as to rates, what is it? Deflation can result from falling demand and boosts the value of money. Aflat taxis an alternative income tax that applies the same rate to every income level. Property taxes are usually determined based on To protect domestic businesses Taxes assessed under a progressive system are based on the taxable amount of an individual's income. In the U.S. and certain other developed nations, a progressive tax is applied to income, but other taxes are levied uniformly, such as sales tax and user fees. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Lose body fat and feel healthier with our proven supplement, Edgozene! While it may be fair in some instances to tax everyone at the same rate, it is seen as unjust in other cases. The bulldozer is expected to require annual maintenance costing$8,000. The SEC generally oversees financial advisers. f. Advantages. Investopedia does not include all offers available in the marketplace. These include sales, property, and income tax. d. The government almost always spends more than it collects. The cigarette tax is regressive on two levels. Officials are currently working on the statement of activities within the government-wide financial statements. Of that, they spent $36,645 on housing, $12,245 on food, and $16,796 on transportation. A regressive tax system is more common in less developed countries, where there may be a greater number of people in the same income bracket, thus reducing the negative impact of the regressive tax. Parul works for a state agency that conducts random checks of financial records and transactions after expenditures and reviews accounts of disbursing officers of all state funds to assure legal compliance. more money than an athletic trainer but will have a harder time finding a job. Those who oppose progressive taxes often point to a flat tax rate as the most appropriate alternative. Government Economic Policies Pigouvian and sin taxes are specific types of regressive taxes. Incomestatementdata:AdvertisingexpenseCostofmerchandisesoldDeliveryexpenseDepreciationexpense-officebuildingsandequipmentDepreciationexpense-storebuildingsandequipmentDividendrevenueGainonsaleofinvestmentIncomefromLifecareCo.investmentIncometaxexpenseInterestexpenseInterestrevenueMiscellaneousadministrativeexpenseMiscellaneoussellingexpenseOfficerentexpenseOfficesalariesexpenseOfficesuppliesexpenseSalesSalescommissionsSalessalariesexpenseStoresuppliesexpense$125,0003,650,00029,00026,00095,0003,5752,22565,600128,50019,0001,8007,50013,75050,000165,00010,0005,145,000182,000365,00022,000, Retainedearningsandbalancesheetdata:Accountspayable$195,000Accountsreceivable543,000Accumulateddepreciationofficebuildingsandequipment1,580,000Accumulateddepreciation-storebuildingsandequipment4,126,000Allowancefordoubtfulaccounts8,150Available-for-saleinvestments(atcost)110,250Bondspayable,6%,due2022400,000Cash240,000Commonstock,$25par(400,000sharesauthorized;86,570sharesissued,82,670outstanding)2,164,250Dividends:Cashdividendsforcommonstock155,120Cashdividendsforpreferredstock85,000Stockdividendsforcommonstock62,800Goodwill510,000Incometaxpayable40,000Interestreceivable930InvestmentinLifecareCo.stock(equitymethod)689,100InvestmentinNordicWearInc.bonds(longterm)62,000Merchandiseinventory(December31,2012),atlowerofcost(FIFO)ormarket$780,000Officebuildingsandequipment4,320,000Paid-incapitalfromsaleoftreasurystock18,200Paid-incapitalinexcessofpar-commonstock842,000Paid-incapitalinexcessofpar-preferredstock150,000Preferred5%stock,$100par(30,000sharesauthorized;17,000sharesissued)1,700,000Premiumonbondspayable19,000Prepaidexpenses26,500Retainedearnings,January1,20128,708,150Storebuildingsandequipment12,560,000Treasurystock(3,900sharesofcommonstockatcostof$35pershare)136,500Unrealizedgain(loss)onavailable-for-saleinvestments(17,750)Valuationallowanceforavailable-for-saleinvestments(17,750)\begin{aligned} more money than an athletic trainer and will have an easier time finding a job. Regressive taxes are those that are paid regardless of income, such as sales taxes, sin taxes, and property taxes. Globalization is taking place because of the voluntary decisions we make as consumers. Sh are your journ ey. b. citizens contribute to meeting society's needs. Why is it not ideal to get a refund on your taxes each year? The SEC generally oversees banking practices. "Are Federal Taxes Progressive? Fuel taxes are designed to cover the cost of road usage and environmental impacts. Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. regressive tax, tax that imposes a smaller burden (relative to resources) on those who are wealthier.
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