Exam 1: An Introduction to Tax

Manny, a single taxpayer, earns $69,000 per year in taxable income and an additional $12,400 per year in city of Boston bonds. If Manny earns an additional $39,200 in taxable income in 2020, what is his marginal tax rate on this income? (Use tax rate schedule.)(Round your final answer to two decimal places.)

Which of the following is not one of the basic tax rate structures?

Heather, a single taxpayer who files as a head of household, earns $63,200 in taxable income and $8,200 in interest from an investment in city of Oxford bonds. Using the U.S. tax rate schedule for year 2020, how much federal tax will she owe? What is her average tax rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an additional $23,200 of tax deductions, what is her marginal tax rate on these deductions? (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 $63,000 of taxable income. He also has $16,400 in city of Tulsa bonds. His wife, Theresa, earns $51,400 of taxable income. If Leonardo and his wife file married filing jointly in 2020, what would be their average tax rate?(Use tax rate schedule.)(Round your final answer to two decimal places.)

Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing an increase in the city sales tax from 7 percent to 50 percent on all packs of chewing gum purchased in Bogart. Based on the current gum sales, Mandy estimates that this tax will actually reduce the tax revenue on gum sales. What type of forecasting is Mandy using to derive her tax revenue estimates? What "effect" is her estimate based on? Does this necessarily imply that Mandy will be happy given her desire to have a clean downtown?

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 2020, 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.)

Namratha has the choice between investing in a city of Watkinsville bond at 4.5 percent or a Moe's, Incorporated bond at 7 percent. Assuming that both bonds have the same nontax characteristics and that Namratha has a 32 percent marginal tax rate, in which bond should she invest? What interest rate offered by Moe's, Incorporated would make Namratha indifferent between investing in the two bonds?

In terms of effective tax rates, the sales tax can be viewed as a regressive tax.

Employers often withhold federal income taxes directly from workers' paychecks. This is an example of which principle in practice?

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 2020, his marginal tax rate on the deductions would be: (Use tax rate schedule.)(Round your final answer to two decimal places.)

Marc, a single taxpayer, earns $64,200 in taxable income and $5,420 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2020, what is his effective tax rate? (Round your final answer to two decimal places.)(Use Tax rate schedule.)

Regressive tax rate structures are typically considered to be vertically equitable.

Consider the following tax rate structure. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not?

The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life.

Geronimo files his tax return as a head of household for year 2020. If his taxable income is $72,000, what is his average tax rate? (Use tax rate schedule.)(Round your final answer to two decimal places.)

The concept of tax sufficiency:

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.

The ultimate economic burden of a tax is best captured by:

Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not?

Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?