Which statement is correct?
A) Tax credits reduce tax liability on a dollar-for-dollar basis.
B) Tax deductions reduce tax liability on a dollar-for-dollar basis.
C) The benefit of a tax credit depends on the taxpayer's marginal tax rate.
D) Tax deductions are more valuable for high-income taxpayers than for low-income taxpayers.
Tax deductions are a provision of taxation. Under this provision, taxpayers reduce their taxable income. Taxpayers can follow the taxation provision and reduce a standard amount or an itemized amount from the taxable income.
Answer and Explanation: 1
Correct answer is A), Tax credits (TCs) reduce tax liabilities (TL) on a dollar-for-dollar basis (DFD).
A) Yes, TCs reduce TLs on a DFD basis. TCs...
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fromChapter 5 / Lesson 9
Learn about tax structures and see how they work. Explore three types of tax structures, including regressive tax, progressive tax, and proportional tax structures.