TAX QUIZ 1 reviewer

Taxation- The act of laying tax . The means by which the sovereign
through it’s law making body, raises income to defray the necessary
expenses of government.

Tax-enforced proportional and pecuniary contributions from persons and

property levied by the law making body of the state having jurisdiction
over the subject of the burden for the support of the government and all
public needs

Aspects of taxation -
1. Levying or imposition of tax (taxation proper)

2. Collection of tax levied (tax administration)

Basic principles of a sound tax system, define each

1. Fiscal adequacy- should be sufficient to meet the demands of public
expenditures

2. Equality or theoretical justice- tax burden should be distributed in

proportion to the taxpayer’s ability to pay

3. Administrative feasibility

Direct
Tax which is demanded or exacted from the very person who also
shoulders the burden of tax example corporate and income tax, estate,
donors tax

indirect

Tax which is demanded from or are paid by one person in the expectation
and intention that he shall indemnify himself at the expense of another by
passing on the burden to the latter. ex. VAT, Percenge tax, customs duties,

Regressive tax
Tax the rate of which decreases as the tax base or bracket increases. The
tax rate and tax base move in opposite directions. (NO regressive tax)

Progressive tax
Tax the rate of which increases as the tax base or bracket increase

ex. Income tax, estate, donor’s

Regressive system—
More indirect taxes imposed than direct taxes. (applies in soceities which
majority of people have low income

Progressive system-
Tax laws shall place emphasis on direct rather than indieect taxation