Exam 1: An Introduction to Tax

Margaret recently received a parking ticket. This is a common example of a local tax.

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)

In a proportional (flat) tax rate system, the marginal tax rate will always equal the average tax rate.

Which of the following is True regarding use taxes?

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

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

Earmarked taxes are:

Which of the following is not one of the basic tax rate structures?

Which of the following is True?

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?  

Excise taxes are typically levied on the value of a good purchased.

While sales taxes are quite common, currently the U.S. federal government does not impose a sales tax.

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.

Jed Clampett is expanding his family-run beer distributorship into Georgia or Tennessee. His parents began the business many years ago and now three generations of Clampetts work in the family business. Jed will relocate the entire family (his parents, spouse, children, etc.) to either state after the move. What types of taxes may influence his decision of where to locate his business? What non-tax factors may influence the decision?

Which of the following taxes represents the largest portion of U.S. Federal Tax revenues?

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

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

Which of the following federal government actions would make sense if a tax system fails to provide sufficient tax revenue?

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

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.