Global Tax Systems
What is a tax-to-GDP ratio?
The ratio of a country’s total tax revenue to its Gross Domestic Product.
What is a marginal tax rate?
The rate paid on your last dollar of income.
What is the deadline to file taxes in the U.S.?
April 15, unless it falls on a weekend or holiday.
Compare sales tax on a $100 purchase in Tennessee (9.55%) vs. Oregon (0%).
$109.55 vs. $100—$9.55 difference due to Oregon’s lack of sales tax.
How can you reduce taxes in retirement?
Diversify income sources; manage withdrawals to stay in lower brackets.
What are the three main types of tax systems?
Progressive, regressive, and proportional (flat)
What are the main tax filing statuses?
Single, Married Filing Jointly, Head of Household, etc.
What are the pros and cons of tax filing methods?
DIY is cheap but confusing; software is easy but costs money; tax professionals cost more but offer expertise.
Why do states set their own tax policies?
Due to federalism—states control local tax needs and budgets.
What is the tax penalty for early withdrawal from a retirement account?
Usually 10% plus income taxes.
How can a country’s citizens benefit from higher or lower federal taxes?
Higher taxes may fund more public services; lower taxes can increase disposable income and reduce government intervention.
How does income level relate to marginal tax rates in the U.S.?
Higher income moves you into a higher marginal bracket.
Why are tax credits more valuable than deductions?
Credits reduce taxes dollar-for-dollar; deductions reduce taxable income.
Why consider cost of living when comparing sales taxes?
High sales tax might be offset by no income tax or low property taxes.
Are Social Security benefits taxable?
Yes, depending on your total income.
Why does a country’s tax-to-GDP ratio provide better context than total revenue collected?
Because it shows how much tax is collected relative to economic output, not just total dollars.
If you earn $100,000, will you owe $24,000 in tax?
No. Marginal tax brackets apply gradually; only part of income is taxed at the top rate.
When do most Americans file taxes?
Between January and April 15.
What is the average sales tax rate in your state?
ashington is ~9.4%
Are required minimum distributions (RMDs) taxable?
Yes—RMDs from Traditional accounts are treated as taxable income.
Which country has the highest tax-to-GDP ratio?
Denmark has the highest tax-to-GDP ratio (~46%)
Who pays more: A Single filer or Married Couple (filing jointly) with $65,000 income?
No. Marginal tax brackets apply gradually; only part of income is taxed at the top rate.
What’s the general process to file taxes?
Gather documents → Choose filing method → Fill out Form 1040 → Submit by deadline.
Which U.S. states have no statewide sales tax?
Delaware, Montana, Oregon, New Hampshire, and Alaska.
What’s the difference between Roth and Traditional IRA taxes?
Roth: taxed now, tax-free later; Traditional: tax-deductible now, taxed later.