what is the benefit of tax credits over tax deductions? a. they apply to all forms of income b. they reduce…

what is the benefit of tax credits over tax deductions? a. they apply to all forms of income b. they reduce gross income c. they are calculated before deductions d. they directly lower the amount of taxes owed which tax system charges higher rates as income increases? a. federal progressive income tax b. regressive tax system c. flat tax system d. municipality tax

what is the benefit of tax credits over tax deductions? a. they apply to all forms of income b. they reduce gross income c. they are calculated before deductions d. they directly lower the amount of taxes owed which tax system charges higher rates as income increases? a. federal progressive income tax b. regressive tax system c. flat tax system d. municipality tax

Answer

Brief Explanations:

  1. Tax credits are dollar - for - dollar reductions of tax liability. Tax deductions reduce taxable income. So, the key benefit of tax credits is that they directly lower the amount of taxes owed.
  2. A progressive tax system has higher tax rates for higher income levels. Federal progressive income tax is an example of such a system. Regressive tax systems have higher rates for lower - income earners, flat tax systems have a single rate for all income levels, and municipality tax is a general term that doesn't necessarily imply a progressive nature.

Answer:

  1. d. They directly lower the amount of taxes owed
  2. a. Federal progressive income tax