Question

ASSIGNMENT 1 CHAPTER 1: AN INTRODUCTION TO TAX TAXATION ACCOUNTING (ACC412) SEMESTER 2, 2019-2020 ANSWER ALL QUESTIONS QUESTION 1 Courtney recently received a speeding ticket on her way to the university. Her fine was $200. Is this considered a tax? Why or why not? QUESTION 2 Marlon and Latoya recently started building a house. They had to pay $300 to the county government for a building permit. Is the $300 payment a tax? Why or why not? QUESTION 3 To help pay for the city's new stadium, the city of Birmingham recently enacted a 1 percent surcharge on hotel rooms. Is this a tax? Why or why not? QUESTION 4 Describe the differences between proportional, progressive, and regressive tax rate structures. QUESTION 5 What are unemployment taxes? QUESTION 6 The state of Georgia recently increased its tax on a pack of cigarettes by $2. What type of tax is this? Why might Georgia choose this type of tax? QUESTION 7 What is an ad valorem tax? Name an example of this type of tax.

Answer 1

Answer 1.

No, speeding ticket of $200 is not considered as tax but will be considered as fine or penalty. The taxes differs from fines and penalties because taxes are not intended to punish or prevent illegal behaviour.

Answer 2.

No, the building permit paid by Marlon and Layota will not be considered as tax because $300 payment is directly related to the benefit they receive i.e., ability to build a house.

Answer 3.

Yes, the one percent surcharge enacted by the city of Birmingham on the hotel rooms will be considered as tax because it is an earmarked tax i.e., collected for a specified purpose. The surcharge is considered as tax because the tax payment made by taxpayers do not directly relate to the specific benefit received by the taxpayers.

Answer 4.

Proportional - A proportional tax applies the same tax rate to all individuals regardless of the income.

Progressive - A progressive tax imposes a greater percentage of taxation on higher income levels, operating on the theory that high-income earners can afford to pay more.

Regressive - Regressive tax is indirectly proportional to income. A regressive tax is thought to be disproportionately difficult on lower income individuals because it's the same percentage of tax on products or services purchased regardless of the buyer's income.

Answer 5.

Employers are required to pay federal and state unemployment taxes, which fund temporary unemployment benefits for individuals terminated from their jobs without cause. The tax base for the unemployment taxes is wages or salary.

Answer 6.

​​​​​The cigarette tax is both considered as an excise tax(i.e., tax based on quantity purchased) and sin tax (i.e.,tax on goods that are deemed to be socially undesireable). Georgia may choose this type of tax to discourage smoking and because sin taxes are often viewed as acceptable ways of increasing tax revenues.

Answer 7.

The term "ad valorem" is Latin for "according to value", which means that it is flexible, and it depends on the assessed value of an asset, product, or service. An ad valorem tax is charged by state and municipal governments, and it is based on the assessed value of a prdouct or property.The most common example of ad valorem tax is the propert tax which is charged on the real estate and personal property.