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Exam 1: An Introduction to Tax

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Question 51

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

A) True
B) False

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Question 52

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

A) True
B) False

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Question 53

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The tax base for the federal income tax is taxable income.

Bart is contemplating starting his own business.His new business would operate as a sole proprietorship and would require hiring several employees.Describe the employment-related taxes that Bart should be aware of as he starts his new business as a self-employed business owner.

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

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 2018,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 his marginal tax rate on this income? (Round the tax rates to 2 decimal places,e.g.,.12345 as 12.35%)(Use tax rate schedule)

Evaluate the U.S.federal tax system on the certainty and economy criteria.

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

The ultimate economic burden of a tax is best captured by:

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 2018,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 2018,how much federal tax will he owe? (Use tax rate schedule)

Which of the following statements is true?

In considering the "economy" criterion in evaluating tax systems,one must consider this criterion from both the taxpayer and the government's perspective.

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

Employers often withhold federal income taxes directly from worker's paychecks.This is an example of which principle in practice?

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

Which of the following is false?

Eliminating the current system of withholding income taxes directly from employee paychecks would:

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

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