Exam 1: An Introduction to Tax

Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2018, what is his average tax rate (rounded)? (Use tax rate schedule)

While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax.

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

The tax base for the federal income tax is taxable income.

In addition to raising revenues, specific U.S. taxes may have other objectives (e.g., economic or social objectives).

Which of the following represents the largest percentage of average state tax revenue?

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

If Susie earns $750,000 in taxable income and files as head of household for year 2018, what is Susie's average tax rate (rounded)? (Use tax rate schedule)".

In considering the "economy" criterion in evaluating tax systems, one must consider this criterion from both the taxpayer and the government's perspective.

For each of the following, determine if each is a tax and why or why not. a. $2.50 toll paid on the Florida Turnpike b. $300 ticket for reckless driving c. 1% local surcharge on hotel rooms to fund public roadways d. 2% city surcharge on wages earned in the city of Philadelphia

Earmarked taxes are:

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

Which of the following taxes represents the largest portion of U.S. Federal Tax revenues?

The substitution effect:

Manny, a single taxpayer, earns $65,000 per year in taxable income and an additional $12,000 per year in city of Boston bonds. What is Manny's current marginal tax rate for year 2018? (Use tax rate schedule)

Which of the following is true regarding use taxes?

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

The concept of tax sufficiency:

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

Taxes influence which of the following decisions?