B. Whose burden (incidence) cannot be shifted to another person, and is paid directly by the person or entity on whom it is legally levied
2.
An 'Indirect Tax' is best defined as a tax:
A.
That applies only to income earned from foreign investments
B.
That is paid directly by the government to itself
C.
Levied on goods or services, where the legal liability to pay may rest with one party (such as a seller), but the final economic burden can be shifted to another party (typically the final consumer)
D.
That can only be levied on imported goods, never on domestically produced goods
C. Levied on goods or services, where the legal liability to pay may rest with one party (such as a seller), but the final economic burden can be shifted to another party (typically the final consumer)
3.
The distinction between 'tax impact' and 'tax incidence' is that:
A.
Tax impact and tax incidence are simply two different names for the exact same concept
B.
Tax impact refers to taxes on imports, while tax incidence refers to taxes on exports
C.
Tax impact refers to the point at which a tax is initially levied or collected (the statutory liability), while tax incidence refers to the point at which the final economic burden of the tax actually rests
D.
Tax impact applies only to direct taxes, while tax incidence applies only to indirect taxes
C. Tax impact refers to the point at which a tax is initially levied or collected (the statutory liability), while tax incidence refers to the point at which the final economic burden of the tax actually rests
4.
A 'Progressive Tax' refers to a tax structure in which:
A.
The tax rate decreases as the taxable income or base increases
B.
The tax rate increases as the taxable income or base increases, so that those with higher incomes pay a proportionately larger share
C.
The tax rate remains exactly the same regardless of the size of the taxable base
D.
The tax is levied only on individuals below a certain minimum income
B. The tax rate increases as the taxable income or base increases, so that those with higher incomes pay a proportionately larger share
5.
A 'Regressive Tax' refers to a tax that, in effect:
A.
Automatically decreases to zero once a person's income exceeds a certain level
B.
Is levied only on individuals earning above a certain very high income threshold
C.
Takes a proportionately larger share of income from lower-income individuals than from higher-income individuals, even if the nominal tax rate is the same for everyone
C. Takes a proportionately larger share of income from lower-income individuals than from higher-income individuals, even if the nominal tax rate is the same for everyone
6.
A 'Proportional Tax' refers to a tax structure in which:
A.
The tax rate remains constant (a flat rate) regardless of the size of the taxable income or base
B.
The tax applies only to the wealthiest 1% of taxpayers
C.
The tax is levied only once in a person's lifetime
D.
The tax rate increases continuously without any upper limit
