Exam 1: An Introduction to Tax

One must consider the "economy" criterion in evaluating tax systems from both the taxpayer's and the government's perspective.

The largest federal tax, in terms of revenue collected, is the Social Security tax.

To calculate a tax, you need to know: I.the tax base II.the taxing agency III.the tax rate IV.the purpose of the tax

Congress would like to increase tax revenues by 20 percent.Assume that the average taxpayer in the United States earns $80,000 and pays an average tax rate of 17.5 percent.If the income effect is larger than the substitution effect, what average tax rate will result in a 20 percent increase in tax revenues? This is an example of what type of forecasting?

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00.What type of tax is this?

Raquel recently overheard two journalism students discussing the merits of the federal tax system.One student offered as an example of unfairness a well-known politician's spouse, who paid little income tax, as most of the spouse's income was earned in the form of municipal bond interest.What type of taxes is the journalism student considering in his example? What type of taxes is he ignoring? Define each type of tax.What role does each type of tax play in calculating relative tax burdens? What role does each type of tax play in evaluating fairness?

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

Margaret recently received a parking ticket.This is a common example of a local tax.

Which of the following is considered a tax?

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest.Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc.that pays 9 percent interest with similar risk as the city of Athens bond.Assume that Curtis's marginal tax rate is 24 percent. If Curtis invested in the Initech, Inc.bonds, what would be his after-tax rate of return from this investment?

Ariel invests $50,000 in a city of Las Vegas bond that pays 5 percent interest.Alternatively, Ariel could have invested the $50,000 in a bond recently issued by Jittery Joe's, Inc.that pays 8 percent interest with similar non-tax characteristics as the city of Las Vegas bond (e.g., similar risk).Assume that Ariel's marginal tax rate is 24 percent.What is her after-tax rate of return for the city of Las Vegas bond? For the Jittery Joe's, Inc.bond? How much explicit tax does Ariel pay on the city of Las Vegas bond? How much implicit tax does she pay on the city of Las Vegas bond? How much explicit tax would she have paid on the Jittery Joe's, Inc.bond? Which bond should she choose?

Given the following tax structure, what is the minimum tax that would need to be assessed on Dora to make the tax progressive with respect to average tax rates? What is the minimum tax that would need to be assessed on Dora to make the tax progressive with respect to effective tax rates? Tuxpayer Salary Muni-Band Interest Total Tax Diego 30,000 10,000 1,500 Dora 50,000 5,000 ???

There are several different types of tax rates that taxpayers might use in different contexts.Describe each tax rate and how a taxpayer might use it.

Evaluate the U.S.federal tax system on the certainty and economy criteria.

Which of the following is true regarding use taxes?

Leonardo, who is married but files separately, earns $80,000 of taxable income.He also has $15,000 in city of Tulsa bonds.His wife, Theresa, earns $50,000 of taxable income. If Leonardo and his wife file married filing jointly in 2019, What is Leonardo and Theresa's effective tax rate for 2019 (rounded)? (Use tax rate schedule.)

Property taxes may be imposed on both real and personal property.

Which of the following is true?

Nick and Jessica are married taxpayers that file married filing separately.Jessica earns $250,000 of taxable income per year.Nick earns $130,000 of taxable income per year.Using the appropriate U.S.tax rate schedule for year 2019, how much tax does each of them pay? What are their marginal and average tax rates? How much tax would they save, if any, if they filed jointly? (Round the tax rates to two decimal places, e.g., .12345 as 12.35 percent.)(Use tax rate schedule.)

Leonardo, who is married but files separately, earns $80,000 of taxable income.He also has $15,000 in city of Tulsa bonds.His wife, Theresa, earns $50,000 of taxable income. If Leonardo instead had $30,000 of additional tax deductions for 2019, his marginal tax rate (rounded)on the deductions would be: (Use tax rate schedule.)