Contrast FICA and FUTA as to the following:
a. Purpose of the tax.
b. Upon whom imposed.
c. Governmental administration of the tax.
d. Reduction of tax based on a merit rating system.
30. LO.4 In connection with the Medicare component of FICA, comment on the following:
a. Any dollar limitation imposed.
b. The applicability of the .9 % increase in the 1.45% regular tax rate.
31. LO.4 One of the tax advantages of hiring family members to work in your business is that FICA taxes are avoided. Do you agree with this statement? Explain.
32. LO.4 Describe the nature and purpose of the following taxes:
a. Severance taxes.
b. Franchise taxes.
c. Occupational fees.
d. Customs duties.
e. Export duties.
33. LO.4 Regarding the value added tax (VAT), comment on the following:
a. Popularity of this type of tax.
b. Nature of the tax.
c. Effect on government spending.
34. LO.4 Both a value added tax (VAT) and a national sales tax have been criticized as being regressive in their effect.
b. How could this shortcoming be remedied in the case of a national sales tax?
35. LO.4, 5 Serena operates a lawn maintenance service in Southern California. As most of her employees are itinerant, they are paid on a day-to-day basis. Because of cash-flow problems, Serena requires her customers to pay cash for the services she provides.
a. What are some of the tax problems Serena might have?
b. Assess Serena’s chances of audit by the IRS.