WGU C237 Taxation 1 Questions with Correct Answers 100% Verified By Experts| 2025/2026
Latest Update
Tax a required payment to a local, state, or national government unrelated to any specific
benefit or service received from the government
Key components of a tax Not voluntary
Payment imposed by government
Payment not tied directly to benefit received by the taxpayer
U.S. constitution article 1, section 8. Clause 1 Congress had the right to lay taxes
16th Amendment (1913) The Congress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment among the several States, and without
regard to any census or enumeration.
Tax rate level of taxes imposed on the tax base and is usually expressed as a percentage
Tax base defines what is actually taxed and is usually expressed in monetary terms
Tax= tax base x tax rate
Flat tax a single tax applied to an entire base
Graduated tax The base is divided into a series of monetary amounts, or brackets, and each
successive bracket is taxed at a different percentage rate
Marginal tax rate The tax rate that applies to the next additional increment of a taxpayers
taxable income
, Average tax rate the taxpayer's average level of taxation on each dollar of taxable income
Effective tax rate the taxpayer's average rate of taxation on each dollar of total income
(both taxable and non-taxable)
Proportional tax rate (Flat Tax) imposes a constant tax rate throughout the tax base (income
increases - tax rate stays constant)
Progressive tax rate imposes an increasing marginal tax rate as the tax base increases
Regressive tax rate imposes a decreasing marginal tax rate as the tax base increases social
security
OASDI (Social Security) Tax rate 6.2% for employee, 6.2% for employer.
If self implied you pay 12.4%
Medicare Tax 1.45% for employee, 1.45% for employer
If self employed you pay 2.9%
Criteria used to evaluate how good is a tax system 1. Sufficiency
2. Equity
3. Certainty
4. Convenience
5. Economy
Sufficiency involves assessing the aggregate size of the tax revenues that must be generated
and making sure that the tax system provides these revenues
Latest Update
Tax a required payment to a local, state, or national government unrelated to any specific
benefit or service received from the government
Key components of a tax Not voluntary
Payment imposed by government
Payment not tied directly to benefit received by the taxpayer
U.S. constitution article 1, section 8. Clause 1 Congress had the right to lay taxes
16th Amendment (1913) The Congress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment among the several States, and without
regard to any census or enumeration.
Tax rate level of taxes imposed on the tax base and is usually expressed as a percentage
Tax base defines what is actually taxed and is usually expressed in monetary terms
Tax= tax base x tax rate
Flat tax a single tax applied to an entire base
Graduated tax The base is divided into a series of monetary amounts, or brackets, and each
successive bracket is taxed at a different percentage rate
Marginal tax rate The tax rate that applies to the next additional increment of a taxpayers
taxable income
, Average tax rate the taxpayer's average level of taxation on each dollar of taxable income
Effective tax rate the taxpayer's average rate of taxation on each dollar of total income
(both taxable and non-taxable)
Proportional tax rate (Flat Tax) imposes a constant tax rate throughout the tax base (income
increases - tax rate stays constant)
Progressive tax rate imposes an increasing marginal tax rate as the tax base increases
Regressive tax rate imposes a decreasing marginal tax rate as the tax base increases social
security
OASDI (Social Security) Tax rate 6.2% for employee, 6.2% for employer.
If self implied you pay 12.4%
Medicare Tax 1.45% for employee, 1.45% for employer
If self employed you pay 2.9%
Criteria used to evaluate how good is a tax system 1. Sufficiency
2. Equity
3. Certainty
4. Convenience
5. Economy
Sufficiency involves assessing the aggregate size of the tax revenues that must be generated
and making sure that the tax system provides these revenues
