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Exam 1: An Introduction to Tax

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Question 51

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If Susie earns $754,000 in taxable income, how much tax will she pay as a single taxpayer for 2020? (Use tax rate schedule.)

A) $216,129
B) $278,980
C) $243,407
D) $156,235
E) None of the choices are correct

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Question 52

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Determine if eachof the following 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 percent local surcharge on hotel rooms to fund public roadways d. 2 percent city surcharge on wages earned in the city of Philadelphia

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a. Not a tax because receiving a specifi...

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Question 53

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Curtis invests $400,000 in a city of Athens bond that pays 6 percent interest. Alternatively, Curtis could have invested the $400,000 in a bond recently issued by Initech, Incorporated that pays 6.75 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. What is Curtis's after-tax rate of return on the city of Athens bond?

Margaret was issued a $150 speeding ticket. This is:

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

If Susie earns $750,000 in taxable income and files as head of household for year 2020, what is Susie's average tax rate? (Use tax rate schedule.) (Round your final answer to two decimal places.)

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

Relative to explicit taxes, implicit taxes are much easier to estimate.

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

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

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

Sin taxes are:

Jackson has the choice to invest in city of Mitchell bonds or Sundial, Incorporated corporate bonds that pay 10 percent interest. Jackson is a single taxpayer who earns $55,000 annually. Assume that the city of Mitchell bonds and the Sundial, Incorporated bonds have similar risk. 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, Incorporated bonds for 2020? (Use tax rate schedule.)

A common example of an employment-related tax is the Medicare tax.

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 2020, what is his marginal tax rate on this income? (Use tax rate schedule.) (Round your final answer to two decimal places.)

Leonardo, who is married but files separately, earns $65,500 of taxable income. He also has $17,400 in city of Tulsa bonds. His wife, Theresa, earns $52,400 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for 2020? (Use tax rate schedule.)

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 2020? (Use tax rate schedule.)

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Junior earns $80,000 taxable income as a regional circuit stock car driver and is taxed at an average rate of 25 percent (i.e., $20,000 of tax). If Congress increases the income tax rate such that Junior's average tax rate increases from 25 percent to 30 percent, how much more income tax will he pay assuming that the income effect is larger than the substitution effect? What effect will this tax rate change have on the tax base and tax collected? What will happen to the government's tax revenues if Junior chooses to spend more time pursuing his other passions besides work (e.g., earns only $60,000 in taxable income)in response to the tax rate change? What is the term that describes this type of reaction to a tax rate increase? (Round your answers to two decimal places.)

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