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WGU- C237
Taxation -C237
| Term | Definition |
|---|---|
| Ad valorem taxes | taxes based on the value of property. |
| Average tax rate | a taxpayer’s average level of taxation on each dollar of taxable income. Specifically, |
| Bracket | a subset (or portion) of the tax base subject to a specific tax rate. Brackets are common to graduated taxes. |
| Certainty | one of the criteria used to evaluate tax systems. Certainty means taxpayers should be able to determine when, where, and how much tax to pay. |
| Convenience | one of the criteria used to evaluate tax systems. Convenience means a tax system should be designed to facilitate the collection of tax revenues without undue hardship on the taxpayer or the government. |
| Dynamic forecasting | the process of forecasting tax revenues that incorporates into the forecast how taxpayers may alter their activities in response to a tax law change. |
| Earmarked tax | a tax assessed for a specific purpose (e.g., for education). |
| Economy | one of the criteria used to evaluate tax systems. Economy means a tax system should minimize its compliance and administration costs. |
| Effective tax rate | the taxpayer’s average rate of taxation on each dollar of total income. Also, the tax rate computed by dividing a company’s income tax provision (expense or benefit) for the year by its pretax income from continuing operations. |
| Effective Tax Rate Formula | Total Tax/Total income |
| Average tax rate Formula | Total Tax/Taxable income |
| Employment taxes | taxes consisting of the Old Age, Survivors, and Disability Insurance (OASDI) tax, commonly called the Social Security tax, and the Medical Health Insurance (MHI) tax, known as the Medicare tax. |
| Equity | one of the criteria used to evaluate a tax system. A tax system is considered fair or equitable if the tax is based on the taxpayer’s ability to pay; taxpayers with a greater ability to pay tax pay more tax. |
| Estate tax | the tax paid for an estate. |
| Excise taxes | taxes levied on the retail sale of particular products. They differ from other taxes in that the tax base for an excise tax typically depends on the quantity purchased rather than a monetary amount. |
| Explicit taxes | taxes directly imposed by a government. |
| Flat tax | a tax in which a single tax rate is applied throughout the tax base. |
| Gift tax | the tax paid on a gift. |
| Graduated taxes | taxes in which the tax base is divided into a series of monetary amounts, or brackets, where each successive bracket is taxed at a different (gradually higher or gradually lower) percentage rate. |
| Horizontal equity | one of the dimensions of equity. Horizontal equity is achieved if taxpayers in similar situations pay the same tax. |
| Implicit taxes | indirect taxes that result from a tax advantage the government grants to certain transactions to satisfy social, economic, or other objectives. Implicit taxes are defined as the reduced before-tax return because of its tax-advantaged status. |
| Income effect | one of the two basic responses that a taxpayer may have when taxes increase. The income effect predicts that when taxpayers are taxed more (e.g., tax rate increases from 25 to 28 percent), they will work harder to generate the same after-tax dollars. |
Created by:
Jesuisbanan