Exam 1: An Introduction to Tax

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

One key characteristic of a tax is that it is a required payment to a governmental agency.

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

Regressive tax rate structures are typically considered to be vertically equitable.

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 year 2018, what is his marginal tax rate (rounded) on this income? (Use tax rate schedule) 

Al believes that SUVs have negative social and environmental effects because of their increased carbon monoxide emissions. He proposes eliminating sales taxes on smaller automobiles in favor of higher sales taxes levied on SUVs. Al performs some calculations and comes to the conclusion that based on the current number of SUVs owned in the U.S. exactly the same amount of total sales tax will be collected under his reformed system. Which of the following concepts explains why Al's idea may not work?

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

For each of the following, determine if each 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% local surcharge on hotel rooms to fund public roadways d. 2% city surcharge on wages earned in the city of Philadelphia

Self-employment taxes are charged on self-employment income in addition to any federal income tax.

Which of the following is not an example of a graduated tax rate structure?

Which of the following statements is True?

Heather, a single taxpayer who files as a head of household, earns $60,000 in taxable income and $5,000 in interest from an investment in city of Oxford Bonds. Using the U.S. tax rate schedule for year 2018, how much federal tax will she owe? What is her average tax rate? What is her effective tax rate? What is her current marginal tax rate? If Heather has an additional $20,000 of tax deductions, what is her marginal tax rate on these deductions? (Round the tax rates to 2 decimal places, e.g., .12345 as 12.35%) (Use tax rate schedule).

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 24%. How much implicit tax would Curtis pay on the city of Athens bond?

The largest federal tax, in terms of revenue collected, is the social security tax.

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 32% 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?

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

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

Dynamic forecasting does not take into consideration taxpayers' responses to a tax change when estimating tax revenues.

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

Sin taxes are: