Global Tax Systems
Why might a country adopt a flat tax rate over a progressive one?
Simplicity and ease of compliance
What is a marginal tax rate?
The rate you pay on the next dollar of income
When is the federal tax filing deadline for most Americans?
April 15
Which five states have no state sales tax?
Alaska, Delaware, Montana, New Hampshire, Oregon
Are withdrawals from a traditional 401(k) taxable?
Yes, they are taxed as ordinary income
How do tax systems influence business location decisions globally?
Countries with lower corporate taxes attract multinational companies
Why don’t higher marginal tax rates mean all income is taxed at that rate?
Only income within that bracket is taxed at the marginal rate
What form do most employees receive from their employer for tax filing?
Form W-2
What factor should you consider when comparing sales tax rates between states?
Overall cost of living and total tax burden
What is the tax benefit of contributing to a Roth IRA?
Withdrawals are tax-free in retirement
What is one reason developing countries may rely more on indirect taxes than income taxes?
Easier to collect and enforce
How does filing status affect your marginal tax rate?
Each status has different income thresholds for each bracket
What's the difference between a tax credit and a tax deduction?
A credit reduces your tax bill dollar-for-dollar; a deduction reduces taxable income
Why do states with no income tax often have higher sales taxes?
To generate revenue from consumption rather than income
At what age must you start taking required minimum distributions (RMDs)?
Age 73 (as of 2025 rules)
What type of tax system is used in most Scandinavian countries?
A progressive tax system
True or False: A person earning $50,000 and another earning $200,000 are taxed at the same rate on their first $11,000.
True
Name two common free tax filing options.
IRS Free File and Volunteer Income Tax Assistance (VITA)
How can the same $100 item cost more in one state than another?
Different local and state tax rates increase total cost
How can state income tax impact retirees differently across the U.S.?
Some states do not tax retirement income or Social Security
Which country has the highest tax-to-GDP ratio in the world
Denmark
Explain how tax brackets reduce the total tax burden for progressive systems.
Only a portion of income is taxed at higher rates, so average tax paid is less than top marginal rate
List three key sections of Form 1040 you must complete.
Filing status, income, tax and credits, payments and refund
What is the average combined state and local sales tax in Tennessee (highest in U.S.)?
Around 9.5%
What’s one strategy to minimize retirement tax burden?
Convert traditional IRA to Roth IRA when in lower tax bracket