Question 1

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

Accepted Answer

a.Not a tax because receiving a specific...

Question 2

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

Accepted Answer

A)  Employment taxes
B)  Corporate income taxes
C)  Individual income taxes
D)  Estate and gift taxes
E)  None of the choices are correctF) C) and D)
G) B) and E)

Question 3

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

Accepted Answer

A)  Sales tax
B)  Individual income tax
C)  Other
D)  Property tax
E)  None of the choices are correctF) B) and C)
G) A) and D)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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. How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2018? (Use tax rate schedule)

Accepted Answer

A)  Nothing
B)  $103.50
C)  $309.75
D)  $5,932.50
E)  None of the choices are correct.F) A) and D)
G) A) and E)

Question 6

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 effective tax rate (rounded) ? (Use tax rate schedule)

Accepted Answer

A)  20.31%
B)  14.06%
C)  15.23%
D)  22.00%
E)  None of the choices are correctF) A) and E)
G) C) and E)

Question 7

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.

Accepted Answer

A) True 
 B)False  False

Question 8

Jackson has the choice to invest in city of Mitchell bonds or Sundial,Inc.corporate bonds that pay 10% interest.Jackson is a single taxpayer who earns $55,000 annually.Assume that the city of Mitchell bonds and the Sundial,Inc.bonds have similar risk. What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent between investing in the city of Mitchell and the Sundial,Inc.bonds for year 2018? (Use tax rate schedule)

Accepted Answer

A)  7.80%
B)  10.00%
C)  8.00%
D)  7.20%
E)  None of the choices are correct.F) C) and E)
G) B) and C)

Question 9

The city of Granby,Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school.This surcharge is an example of ________.

Accepted Answer

A)  A sin tax to discourage undesirable behavior
B)  A government fine
C)  An earmarked tax
D)  A sin tax to discourage undesirable behavior and an earmarked tax
E)  None of theseF) A) and E)
G) C) and D)

Question 10

Congress recently approved a new,smaller budget for the IRS.What taxation concept evaluates the cost of administering our tax law?

Accepted Answer

A)  Convenience.
B)  Economy.
C)  Certainty.
D)  Equity.
E)  None of the choices are correct.F) A) and B)
G) A) and C)

Question 11

There are several different types of tax rates that taxpayers might use in different contexts.Describe each tax rate and how a taxpayer might use it.

Accepted Answer

The marginal tax rate is the tax rate th...

Question 12

Given the following tax structure,what is the minimum tax that would need to be assessed on Lizzy to make the tax progressive with respect to average tax rates? What is the minimum tax that would need to be assessed on Lizzy to make the tax progressive with respect to effective tax rates?
 
 $\begin{array} { | l | r | r | r |} 
\hline { \text { Texpayer } } & { \text { Salary } } & \text { Muni-Bond Interest } &  { \text { Tatal Tax } } \
\hline \text { Mort } & 20,006 & 5,006 & 4,000 \
\hline \text { Lizzy } & 80,000 & 30,000 & ? ? ?\
\hline
\end{array}$

Accepted Answer

Mort's average tax rate is 20%.    A 20% average tax rate on Lizzy's $80,000 total income would result in $16,000 of tax (i.e.,20% × $80,000 = $16,000).Thus,Lizzy must pay more than $16,000 tax for the tax structure to be progressive with respect to average tax rates. Mort's effective tax rate is 16%.  A 16% effective tax rate on Lizzy's $110,000 total income would result in $17,600 of tax (i.e.,16% × $110,000 = $17,600).Thus,Lizzy must pay more than $17,600 tax for the tax structure to be progressive with respect to effective tax rates.

Question 13

The effective tax rate,in general,provides a better depiction of a taxpayer's tax burden than the average tax rate.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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?

Accepted Answer

Mandy's forecast is based on dynamic for...

Question 17

Which of the following is true regarding use taxes?

Accepted Answer

A)  A use tax is relatively easy to enforce compared to a sales tax.
B)  Use taxes attempt to eliminate any tax advantage of purchasing goods out of state.
C)  Use taxes encourage taxpayers to buy goods out of state to avoid paying sales tax in their home state.
D)  A use tax is generally a progressive tax.
E)  None of the choices are correct.F) All of the above
G) C) and E)

Question 18

Fred and Wilma,married taxpayers,earn $100,000 in taxable income and $20,000 in interest from an investment in city of Bedrock Bonds.Using the U.S.tax rate schedule for married filing jointly for year 2018,how much federal tax will they owe? What is their average tax rate? What is their effective tax rate? What is their current marginal tax rate? If Fred and Wilma earn an additional $40,000 of taxable income,what is their marginal tax rate on this income? (Round the tax rates to 2 decimal places,e.g.,.12345 as 12.35%)(Use tax rate schedule)

Accepted Answer

Fred and Wilma will owe $13,879 in federal income tax this year computed as follows:$13,879 = $8,907 + (22% × ($100,000 − $77,400)). Fred and Wilma's average tax rate is 13.88%. Average Tax Rate = Total Tax/Taxable Income = $13,879/$100,000 = 13.88% Fred and Wilma's effective tax rate is 11.57%. Effective Tax Rate = Total Tax/Total Income = $13,879/($100,000 + $20,000)= 11.57% Fred and Wilma are currently in the 22% tax rate bracket.Their marginal tax rate on small increases in income and deductions is 25%. If Fred and Wilma earn an additional $40,000 of taxable income,their marginal tax rate on the income is 22.00%. Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($22,679 -$13,879)/($140,000 − $100,000)= 22.00%

Question 19

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.

Accepted Answer

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 D)
G) A) and B)

Question 20

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

Accepted Answer

A)  Two taxpayers with identical income pay different amounts of tax because one taxpayer's income includes tax exempt interest.
B)  Two taxpayers pay different amounts of property tax amounts on similar plots of land (i.e.,same value) because one plot of land is used to raise crops.
C)  Two taxpayers pay different amounts of estate tax because one taxpayer's estate is worth significantly more.
D)  All of the choices are correct.
E)  None of the choices are correct.F) All of the above
G) B) and C)

Exam 1: An Introduction to Tax

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

Correct Answer
verified
a.Not a tax because receiving a specific...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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. How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2018? (Use tax rate schedule)

Correct Answer
verified

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 effective tax rate (rounded) ? (Use tax rate schedule)

Correct Answer
verified

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.

Correct Answer
verified
False

Correct Answer
verified

The city of Granby,Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school.This surcharge is an example of ________.

Correct Answer
verified

Congress recently approved a new,smaller budget for the IRS.What taxation concept evaluates the cost of administering our tax law?

Correct Answer
verified

There are several different types of tax rates that taxpayers might use in different contexts.Describe each tax rate and how a taxpayer might use it.

Correct Answer
verified
The marginal tax rate is the tax rate th...
View Answer

The effective tax rate,in general,provides a better depiction of a taxpayer's tax burden than the average tax rate.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
Mandy's forecast is based on dynamic for...
View Answer

Which of the following is true regarding use taxes?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Exam 1: An Introduction to Tax

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

Correct Answerverifieda.Not a tax because receiving a specific...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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. How much money would Leonardo and Theresa save if they file jointly instead of separately for year 2018? (Use tax rate schedule)

Correct AnswerverifiedShow Answer

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 effective tax rate (rounded) ? (Use tax rate schedule)

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedFalse

Correct AnswerverifiedShow Answer

The city of Granby,Colorado recently enacted a 1.5% surcharge on vacation cabin rentals that will help pay for the city's new elementary school.This surcharge is an example of ________.

Correct AnswerverifiedShow Answer

Congress recently approved a new,smaller budget for the IRS.What taxation concept evaluates the cost of administering our tax law?

Correct AnswerverifiedShow Answer

There are several different types of tax rates that taxpayers might use in different contexts.Describe each tax rate and how a taxpayer might use it.

Correct AnswerverifiedThe marginal tax rate is the tax rate th...View AnswerShow Answer

The effective tax rate,in general,provides a better depiction of a taxpayer's tax burden than the average tax rate.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedMandy's forecast is based on dynamic for...View AnswerShow Answer

Which of the following is true regarding use taxes?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
a.Not a tax because receiving a specific...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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False

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The marginal tax rate is the tax rate th...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Mandy's forecast is based on dynamic for...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified