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Exam 1: An Introduction to Tax

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Question 61

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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 effective tax rate? (Use tax rate schedule in the text)

A) 17.90%
B) 16.52%
C) 14.23%
D) 25.00%
E) None of the choices are correct

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

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Question 62

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Which of the following is a tax? I.A 1% special sales tax for funding local road construction. II) A fee paid to the state for a license to practice as an attorney. III) An income tax imposed by Philadelphia on persons working within the city limits. IV) A special property assessment for installing a new water system in the taxpayer's neighborhood.

A) Only I is correct.
B) Only IV is correct.
C) Only III is correct.
D) III and IV are correct.
E) I and III are correct.

F) C) and E)
G) A) and D)

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Question 63

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A use tax is typically imposed by a state on goods purchased within the state.

Leonardo earns $80,000 of taxable income.He also has $15,000 in city of Tulsa bonds.His wife,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 in the text)

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

To calculate a tax,you need to know: I.the tax base II) the taxing agency III) the tax rate IV) the purpose of the tax

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

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 28%. What is Curtis's after-tax rate of return on the city of Athens bond?

Consider the following tax rate structures.Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not? $\begin{array} { | l | r | r | } \hline { \text { Texpuyer } } & { \text { Salary } } & { \text { Tatal Tux } } \\\hline \text { Lucy } & 40,000 & 4,500 \\\hline \text { Ricky } & 20,000 & 4,500 \\\hline \text { Ethel } & 40,000 & 4,500 \\\hline\end{array}$

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

The estate tax is assessed based on the fair market values of transfers made during a taxpayer's life.

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 in the text)

In terms of effective tax rates,the sales tax can be viewed as a regressive tax.