Asked by Rachel Sawyer on May 14, 2024
Verified
Which statement is true?
A) The federal personal income tax is a proportional tax.
B) The cigarette tax is an excise tax.
C) The tax on gasoline is a direct tax.
D) None is true.
Proportional Tax
A tax system where the rate of taxation is fixed and does not change based on the income level, meaning everyone pays the same percentage of their income in taxes.
Excise Tax
A tax imposed on specific goods, services, or transactions, often included in the price of products like gasoline, tobacco, and alcohol.
Direct Tax
A type of tax levied directly on personal or corporate income.
- Understand the different types of taxes (proportional, progressive, regressive) and their impacts.
Verified Answer
MP
Marvella PierceMay 17, 2024
Final Answer :
B
Explanation :
The statement B is true, as the cigarette tax is an example of an excise tax, which is a tax on specific goods or services, such as alcohol, tobacco, and gasoline.
Statement A is false, as the federal personal income tax is a progressive tax, meaning the percentage of income paid in taxes increases as income increases.
Statement C is also false, as the tax on gasoline is an example of an indirect tax, which is a tax on goods or services that is collected by an intermediary (such as a retailer) from the person who bears the ultimate economic burden of the tax (usually the consumer).
Statement A is false, as the federal personal income tax is a progressive tax, meaning the percentage of income paid in taxes increases as income increases.
Statement C is also false, as the tax on gasoline is an example of an indirect tax, which is a tax on goods or services that is collected by an intermediary (such as a retailer) from the person who bears the ultimate economic burden of the tax (usually the consumer).
Learning Objectives
- Understand the different types of taxes (proportional, progressive, regressive) and their impacts.