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Exam 1: An Introduction to Tax

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Question 41

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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 ________.

A) A government fine
B) A sin tax to discourage undesirable behavior and An earmarked tax
C) An earmarked tax
D) A sin tax to discourage undesirable behavior
E) None of the choices are correct

F) C) and D)
G) None of the above

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Question 42

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Jonah, a single taxpayer, earns $150,000 in taxable income and $10,000 in interest from an investment in city of Denver Bonds. Using the U.S. tax rate schedule for year 2017, how much federal tax will he owe? What is his average tax rate? What is his effective tax rate? What is his current marginal tax rate? If Jonah earned an additional $40,000 of taxable income, what is hismarginal tax rate on this income? (Round the tax rates to 2 decimal places, e.g., .12345 as 12.35%) (Use tax rate schedule.)

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Question 43

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Leonardo earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His 7w9i) fe, Theresa, earns $50,000 of taxable income.How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2017? (Use tax rate schedule.)

If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for year 2017? (Use tax rate schedule.)

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

Leonardo earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His 7w8i) fe, Theresa, earns $50,000 of taxable income.What is Leonardo and Theresa's effective tax rate for year 2017? (Use tax rate schedule.)

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has76) $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 year 2017, his marginal tax rate on the deductions would be: (Use tax rate schedule.)

Raquel recently overheard two journalism students discussing the merits of the federal tax system.One student offered as an example of unfairness the spouse of a well-known politician who paidlittle income tax as most of the spouse's income was earned in the form of municipal bond interest. What type of taxes is the journalism student considering in his example? What type of taxes is he ignoring? Define each type of tax. What role does each type of tax play in calculating relative tax burdens? What role does each type of tax play in evaluating fairness?

Which of the following principles encourages a vertically equitable tax system?

Which of the following is considered a tax?

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 2017, 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%) (Use tax rate schedule.)

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 2017, what is his average tax rate (rounded) ? (Use tax rate schedule.)

Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.

Curtis invests $250,000 in a city of Athens bond that pays 7% interest. Alternatively, Curtis 8c5o) uld 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' marginal tax rate is 28%.If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?

Manny, a single taxpayer, earns $65,000 per year in taxable income and an additional $12,00703) per year in city of Boston bonds.What is Manny's current marginal tax rate for year 2017? (Use tax rate schedule.)

Curtis invests $250,000 in a city of Athens bond that pays 7% interest. Alternatively, Curtis 8c4o) uld 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' marginal tax rate is 28%.How much implicit tax would Curtis pay on the city of Athens bond?

To be indifferent between investing in the two bonds, the J.B. Ribs, Inc. bond should provide Nelson t same after-tax rate of return as the city of Fruithurst bond (4%). To solve for the required pre-tax rate return we can use the following formula: After-tax return = Pre-tax return × (1 - Marginal Tax Rate). J.B. Ribs, Inc. needs to offer a 6.67% interest rate to generate a 4% after-tax return and make Nelson indifferent between investing in the two bonds. 4% = Pre-tax return × (1 - 40%); Pre-tax return = 4%/(1 - 40%) = 6.67% -Namratha has the choice between investing in a city of Watkinsville bond at 4.5% or a Moe's, Inc. bond at 7%. Assuming that both bonds have the same non-tax characteristics and that Namratha has a 25% marginal tax rate, in which bond should she invest? What interest rate offered by Moe's, Inc. would make Namratha indifferent between investing in the two bonds?

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

Which of the following statements is true?

Taxes influence which of the following decisions?