Federal Taxation and Revenue Practice Flashcards

Comprehensive flashcards covering federal revenue, income tax history, payroll taxes, social insurance programs, and various other levies as described in the lecture notes.

Who once described taxes as "what we pay for a civilized society"?

Oliver Wendell Holmes

Which amendment, ratified in 1913, authorized the income tax?

The 16th Amendment

When did income tax first become the major source of federal revenue?

In 1917 and 1918

During which period in history was the income tax not the major source of federal revenue after its initial rise?

The 1930s depression

What name is given to a tax system where the higher one's income, the higher the tax?

Progressive tax

According to the 2002 returns, what was the amount of the personal exemption for each taxpayer and dependent?

$$3,000$$

Four examples of items allowed as tax deductions according to the notes.

Medical care costs, most state and local taxes (except sales taxes), interest paid on home mortgages, and charitable contributions

Case that determined the State was liable for the federal saloon license tax because the sale of liquor is not a necessary or usual government activity

1905 case of South Carolina vs. United States

By what date must individuals who earned taxable income in the preceding year file a tax return?

April 15

What agency is responsible for receiving tax returns filed by mail or online?

Internal Revenue Service (IRS)

Which president urged Congress to enact major tax cuts in 2001?

President Bush

Under the new law in 2001, how many tax rate brackets were established for taxable income?

Four

In the lowest 2002 bracket, what was the tax percentage for couples filing joint returns on incomes up to $\$12,000$?

$$10\%$$

What was the highest tax bracket percentage for taxable incomes in the $\$300,000$ range and above in 2002?

$$39.1\%$$

Before the Tax Relief Act of 2001, what were the percentages for the lowest and highest tax brackets?

Lowest was $15\%$ and highest was $39.6\%$

What is the name of the pay-as-you-go plan used by most people to pay their income taxes?

Withholding

How often must individuals with income sources not subject to withholding make payments on their estimated tax?

Quarterly

Which federal tax is considered the most complicated due to its many allowed deductions?

The corporate tax

What types of organizations are exempt from the corporation income tax?

Nonprofit organizations such as churches and charitable foundations

In 2002, what was the range for corporate tax rates?

$15\%$ on the first $\$50,000$ up to a top rate of $38\%$ on incomes over $\$18.33$ million

What is the official term for the basic Social Security program established in 1935?

OASDI (Old-Age, Survivors, and Disability Insurance)

When was Medicare added to the Social Security program?

1965

What program established in 1935 provides benefits to jobless workers?

Unemployment compensation

What term refers to the taxes imposed on employers and employees to support OASDI and Medicare?

Payroll taxes

For 2001, what OASDI tax rate did employees and employers pay on the first $\$80,400$ of wages?

$$6.2\%$$

What OASDI tax rate were self-employed individuals required to pay on their first $\$80,400$ of income?

$$12.4\%$$

What is the Medicare tax rate for employees on their total annual income?

$$1.45\%$$

What Medicare tax rate do self-employed individuals pay on their annual incomes?

$$2.9\%$$

Which joint federal-state operation makes payments to workers who lose jobs for reasons beyond their control?

Unemployment insurance program

Outside of the 50 states, which jurisdictions have their own unemployment compensation laws?

District of Columbia, Puerto Rico, and the Virgin Islands

What is the standard federal tax percentage for unemployment compensation on the first $\$7,000$ paid to an employee?

$$6.2\%$$

After the typical state tax credit of $5.4\%$, what is the actual federal tax amount for unemployment on taxable wages?

$$0.8\%$$

Taxes levied at a flat rate, without regard to a taxpayer's income level or ability to pay

regressive taxes

Where are social insurance tax funds credited after being collected by the IRS?

Trust accounts maintained by the Treasury

A tax laid on the manufacture, sale, or consumption of goods or the performance of services

excise tax

Excise taxes are also called ____ because they are collected from producers who then include them in the price the retail customer pays

Hidden taxes

What is the term for excise taxes imposed on goods like tobacco, beer, and gambling?

Sin taxes

Name of the tax imposed on the assets of one who dies, and the name of the tax that is imposed on a gift made by a living person

estate tax, gift tax

By how much can the president raise or lower a tariff via executive order?

As much as $50\%$

What organization recommends tariff changes to the president based on economic studies of imports?

The United States International Trade Commission

How much of an estate is exempt from the federal estate tax?

The first $\$1,000,000$

What is the annual limit for tax-free gifts from one person to another?

$$\$10,000$$

What is a custom duty?

A tax laid on goods brought into the United States from abroad

imports listed that may be exempt from custom duties.

Bibles, coffee, bananas, and up to $\$400$ of a tourist's purchases abroad

What specific item must duck hunters purchase to fund wildlife conservation programs?

A federal duck stamp

For 2002, what were the minimum and maximum rate ranges on an estate or gift

Minimum : 18% on estate/gift with a net value of less than $20,000

Maximum : 50% on estate/gift worth more than $3 million

Term that is also known as tariff, import duties, or imposts

Custom duty

When did the congress acquire its taxing power

1789

3 other names of excise taxes

hidden, luxury, sin

Higher income, the higher the tax

progressive tax

In 2002, the individual income tax was expected to provide how much money?

over $1 trillion

In the lowest tax bracket, the tax was 10% on how much money for single parents and singles?

$10,000 and $6,000

In 1927, the federal government’s tax collections came to less than how much money?

$3.4 billion

Where did Oliver Wendell Holmes describe taxes as “what we pay for a civilized society”?

insurance tax case - Compania General De Tabacos de Filipinas v. Collector of Internal Revenue, 1927

Who appropriates the funds for the social insurance programs as needed?

Congress