Exam 1: An Introduction to Tax

Geronimo files his tax return as a head of household for year 2013.If his taxable income is $72,000,what is his average tax rate (rounded) ?

Mandy,the mayor of Bogart and a strong advocate of a clean downtown,is proposing an increase in the city sales tax from 7% to 50% on all packs of chewing gum purchased in Bogart.Based on the current gum sales,Mandy estimates that this tax will actually reduce the tax revenue on gum sales.What type of forecasting is Mandy using to derive her tax revenue estimates? What "effect" is her estimate based on? Does this necessarily imply that Mandy will be happy given her desire to have a clean downtown?

Which of the following represents the largest percentage of state tax revenue?

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

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 2013,what is his effective tax rate (rounded) ?

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

Taxes influence which of the following decisions?

Which of the following is false?

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

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

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%.How much explicit tax would Curtis incur on interest earned on the Initech,Inc bond?

Which of the following would not be a failure of the horizontal equity concept?

Leonardo,who is married but files separately,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.If Leonardo instead had $30,000 of additional tax deductions for year 2013,his marginal tax rate (rounded) on the deductions would be:

A 1% charge imposed by a local government on football tickets sold is not considered a tax if all proceeds are earmarked to fund local 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 year 2013,what is his marginal tax rate (rounded) on this income?

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

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

The income and substitution effects are two opposing effects that one could consider in static forecasting.

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.If Leonardo and his wife file married filing jointly in 2013,what would be their average tax rate (rounded) ?

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