Exam 1: An Introduction to 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%.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 9ᵗʰ Amendment to the U.S.Constitution removed all doubt that a federal income tax was allowed under the U.S.Constitution.

Manny,a single taxpayer,earns $65,000 per year in taxable income and an additional $12,000 per year in city of Boston bonds. If Manny earns an additional $35,000 in taxable income in year 2018,what is his marginal tax rate (rounded)on this income? (Use tax rate schedule) 

George recently paid $50 to renew his driver's license.The $50 payment is considered a 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

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 earned an additional $30,000 of taxable income this year,what would be the marginal tax rate (rounded)on the extra income for year 2018? (Use tax rate schedule)

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

Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues.

Nelson has the choice between investing in a city of Fruithurst bond at 4% or a J.B.Ribs,Inc.bond at 6.5%.Assuming that both bonds have the same non-tax characteristics and that Nelson has a 40% marginal tax rate,in which bond should he invest? What interest rate offered by J.B.Ribs,Inc.would make Nelson indifferent between investing in the two bonds?

Geronimo files his tax return as a head of household for year 2018.If his taxable income is $72,000,what is his average tax rate (rounded)? (Use tax rate schedule)

Tax policy rarely plays an important part in presidential campaigns.

Consider the following tax rate structures.Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not?   Taxpayer Salary Tatal Tax Lucy 40,000 \ 4,500 Ricky 20,000 \ 4,500 Ethel 40,000 \ 4,500  

A sales tax is a common example of a progressive tax rate structure.

Which of the following is true?

Oswald is beginning his first tax course and does not really have a solid understanding of the role that taxes play in various decisions.Please describe for Oswald the various types of decisions that taxes may influence.

One key characteristic of a tax is that it is a required payment to a governmental agency.

Which of the following is true regarding real property taxes and personal property taxes?

Al believes that SUVs have negative social and environmental effects because of their increased carbon monoxide emissions.He proposes eliminating sales taxes on smaller automobiles in favor of higher sales taxes levied on SUVs.Al performs some calculations and comes to the conclusion that based on the current number of SUVs owned in the U.S.exactly the same amount of total sales tax will be collected under his reformed system.Which of the following concepts explains why Al's idea may not work?

Excise taxes are typically levied on the value of a good purchased.

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