1. Congress passed a sin tax law that increased the tax rates on cigarettes by 1,000%. The law was thought to be sufficient to drive many cigarette companies out of business, and was questioned in court by a cigarette company that would go out of business because it would not be able to pay the increased tax. The cigarette company is (1%) a) b) destroy c) d) wrong because taxes are the lifeblood of the government wrong because the law recognizes that the power to tax is the power to correct because no government can deprive a person of his livelihood correct because Congress, in this case, exceeded its power to tax
1. Congress passed a sin tax law that increased the tax rates on cigarettes by 1,000%. The law was thought to be sufficient to drive many cigarette companies out of business, and was questioned in court by a cigarette company that would go out of business because it would not be able to pay the increased tax. The cigarette company is (1%) a) b) destroy c) d) wrong because taxes are the lifeblood of the government wrong because the law recognizes that the power to tax is the power to correct because no government can deprive a person of his livelihood correct because Congress, in this case, exceeded its power to tax
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:1. Congress passed a sin tax law that increased the tax rates on cigarettes by
1,000%. The law was thought to be sufficient to drive many cigarette
companies out of business, and was questioned in court by a cigarette
company that would go out of business because it would not be able to pay
the increased tax.
The cigarette company is
(1%)
wrong because taxes, are the lifeblood of the government
wrong because the law recognizes that the power to tax is the power to
a)
b)
destroy
correct because no government can deprive a person of his livelihood
correct because Congress, in this case, exceeded its power to tax
d)
Transcribed Image Text:3. Bank A deposit money with Bank B which earns interest that is subjected to
the 20% final withholding tax. At the same time, Bank A is subjected to the
5% gross receipts tax on its interest income on loan transactions to
customers.
Which statement below INCORRECTLY describes the transaction?
a) There is double taxation because two taxes income tax and gross receipts
tax are imposed on the interest incomes described above and double taxation is
prohibited under the 1987 Constitution
b) There is no double taxation because the first tax is income tax, while the
second tax is business tax;
c) There is no double taxation because the income tax is on the interest income
of Bank A on its deposits with Bank B (passive income), while the gross receipts
tax is on the interest income received by Bank A from loans to its debtor-
customers (active income);
d) Income tax on interest income of deposits of Bank A is a direct tax, while
GRT on interest income on loan transaction is and tax.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education