FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 1: An Introduction to Tax

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

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

A) True
B) False

Correct Answer

verified

True

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

The substitution effect:

A) Predicts that taxpayers will work harder to pay for consumer products when tax rates increase
B) Is one of the effects considered in static forecasting
C) Results in the government collecting more aggregate tax revenue than under the income effect
D) Is typically more descriptive for taxpayers with lower disposable income
E) None of these

F) A) and D)
G) B) and C)

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

If Leonardo instead had $30,000 of additional tax deductions for year 2014, his marginal tax rate (rounded) on the deductions would be:

Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing an increase in the city sales tax from 7% to 50% 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?

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

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 2014, 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 2 decimal places, e.g., .12345 as 12.35%)

The difficulty in calculating a tax is typically in the determination of:

A flat tax is an example of a graduated tax system.

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's taxable and nontaxable income.

Geronimo files his tax return as a head of household for year 2014. If his taxable income is $72,000, what is his average tax rate (rounded) ?

What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial, Inc. bonds for year 2014?

The city of Granby, Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school. This surcharge is an example of ________.

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? $\begin{array} { l c r c } \underline{\text { Taxpayer }} & \underline{\text { Salary }} & \underline{\text { Muni-Bond Interest }} & \underline{\text { Total Tax }} \\\\\text { Diego } & 30,000 & 10,000 & 1,500\\\text { Dora } & 50,000 & 5,000 & ? ? ?\\\end{array}$

If Susie earns $750,000 in taxable income and files as head of household for year 2014, what is Susie's average tax rate (rounded) ?

Milton and Rocco are having a heated debate regarding a national sales tax. Milton argues that a national sales tax is a proportional, vertically equitable tax. Rocco argues that a national sales tax would be a regressive, vertically inequitable tax. Explain both sides of the argument.

What is Manny's current marginal tax rate for year 2014?

The main difficulty in calculating an income tax is determining the correct amount of the tax base.

Which of the following would not be a failure of the horizontal equity concept?

Assume the original facts as given except that Jackson is a head of household taxpayer and the city of Mitchell pays interest of 7.8%. How would you advise Jackson to invest his money?