Copy of Copy of Unit 6_ State and Local Taxes - Notes

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School

Stanly Community College *

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112

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Finance

Date

Apr 3, 2024

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docx

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Uploaded by DeanAtomCrab38

State and Local Taxes Use the information on state and local taxes form the U.S. Department of Treasury to take notes on state and local taxes. https://www.treasury.gov/resource-center/faqs/taxes/pages/state- local.aspx State Sales Tax What is a sales tax? Tax on everything that is bought. What are the three types of sales tax? State, Local and transit. Vendor Tax Who is taxed by a vendor tax? Sales made by a vendor to a customer located outside the vendor's state or sales in interstate commerce if the vendor is registered in the state of delivery What is a vendor tax based upon? any payment for the income tax and national insurance contributions for which the Company has a liability to pay, or to collect at source and pay Consumer Tax Describe how a consumer tax works. Tax on any good or service Combination Who is taxed in a combination vendor-consumer system? The vendor and the consumer From the standpoint of a consumer, why does this appear identical to a consumer tax? Because it is passed down from the vendor Sales Tax, A Regressive Tax With sales tax, all people, no matter how much money they earn, pay the same percentage of tax. With a regressive tax, who pays a higher percentage? Low income groups

Tell why you agree or disagree with the statement: “Since all of us use state services, such as state highways, state public schools, and state medical institutions, all should pay a tax for using these services.” I agree because we all are using them, yes some are using them more than others but they are available for everyone to use. Exclusions and Exemptions Why do some states not tax food? To reduce tax burdens on necessities What are some other common examples of exclusion and exemptions listed here? Some non profits don’t have to pay taxes. A large portion of a state's sales tax revenue goes towards paying for what three things? State and local revenue, funding services like education, transportation, and health care Because of this, many states consider sales tax to be the most important tax they impose. Use Tax Name an example of something to which a use tax is commonly applied. A person buys a vehicle from a dealer in a neighboring state and the dealer does not charge sales tax on the vehicle. The buyer must pay use tax on the purchase price of the vehicle when he/she returns to his/her state and/or city. Property Tax Name three examples of services financed by property taxes. Schools, safety, streets. How is the amount of a property tax determined? The annual property tax paid by each owner is calculated using their assessed value and the local tax rate levied by their county To whom do people usually pay this tax? The government

Give three examples of real property that can be taxed. agricultural, commercial, industrial, residential and utility property Give three examples of personal property that can be taxed. clothes, jewelry, furniture, and automobiles. Fuel Tax How is fuel taxed? North Carolina charges a $0.404 per gallon gas tax What is the basic idea of a “user tax?” People who use gasoline pay taxes on it Inheritance Tax and Estate Taxes What is an inheritance tax? A tax imposed on those who inherit assets from an estate What is an estate tax? A tax on your right to transfer property at your death Corporate Income Tax How does a corporate income tax work? Generally taxes a business' profits, which are revenues (what a business makes in sales) minus costs (the cost of doing business) Why do some states purposely keep this tax low?

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Copy of Copy of Unit 6_ State and Local Taxes - Notes

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