1. Briefly state Adam Smith's four requirements for a good tax system.
2. Based on the discussion in the chapter, evaluate how well each of these taxes meets Adam Smith's four requirements:
a. Income tax
b. Employment taxes
3. Based solely on the definitions in the chapter, is the Social Security tax a proportional, regressive, or pro- gressive tax? Explain, and state how the tax might be viewed differently.
4. Based solely on the definitions in the chapter, is the sales tax a proportional, regressive, or progressive tax? Explain, and state how the tax might be viewed dif- ferently.
5. As stated in the text, the federal income tax is the largest revenue-producing tax in use in the United States. Why do you think the income tax produces more revenue than any other tax?
6. How are federal, state, and local income taxes col- lected by the government? Consider the cases of an em- ployee and a self-employed taxpayer.
7. How is a sales tax different from an excise tax?
8. Who is responsible for collecting sales and excise taxes? Who actually pays the tax?
9. Why is a tax on real property used more often than a tax on personal property?
10. The gift tax is supposed to tax the transfer of wealth from one taxpayer to another. However, the payment of gift tax on a transfer of property is relatively rare. Why is gift tax not paid on most gifts?