Chapter 1 Flashcards
Taxes Influence many types of business decisions but generally do not influence people’s decisions True or False?
False
Margeret recently received a parking ticket. This is a common example of local tax. True or False?
False
One Key Characteristic of a tax is that it is a required payment to a governmental agency True or False?
True
In a proportional (flat) tax rate system, the marginal tax rate will always equal the average tax rate. True or False?
True
In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate. True or False?
False
A sales tax is a common example of a progressive tax rate structure. True or False?
False
Which of the following is considered tax?
A. Tolls
B. Parking Meter Fees
C. A local surcharge paid on retail to fund public schools.
D. Entrance fees paid at national parks.
C. A local surcharge paid on retail to fund public schools
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 2023, what is his marginal tax rate on this income?
22.26 %
Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds.
A. How much federal tax will he owe?
B. What is his average tax rate?
C. What is his effective tax rate?
D. What is his current marginal tax rate?
A. Federal Tax - $11,808
B. Total Tax / Taxable Income = Average Tax Rate of 11808 / 75000 = 15.74%
C. Total Tax/ Total Income = Efective Tax Rate of 11808 / 85000 =$13.89%
D. Marginal tax rate = 22%
Chuck, a single taxpayer, earns $75,000 in taxable income and $10,000 in interest from an investment in City of Heflin bonds.
A. If Chuck earns an additional $40,000 of taxable income, what is his marginal tax rate on this income?
B. What is his marginal rate if, instead, he had $40,000 of additional deductions?
Note: For all requirements, do not round intermediate calculations. Round percentage answers to 2 decimal places.
a. Marginal tax rate 22.98%
b. Marginal tax rate 19.57%
Jorge and Anita, married taxpayers, earn $150,000 in taxable income and $40,000 in interest from an investment in City of Heflin bonds. Using the U.S. tax rate schedule for married filing jointly, how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate?
Note: Round your percentage answers to 2 decimal places.
A. Federal tax
B. Average tax rate
A. Federal tax $23,615
B. Average tax rate 15.74%
C. Effective tax rate 12.42%
D. Marginal tax rate 22.00%
