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Exam 1: An Introduction to Tax

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Question 31

Multiple Choice

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Which of the following taxes represents the largest portion of U.S. federal tax revenues?

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

F) A) and B)
G) A) and E)

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Question 32

Multiple Choice

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Geronimo files his tax return as a head of household for year 2020. If his taxable income is $72,000, what is his average tax rate? (Use tax rate schedule.) (Round your final answer to two decimal places.)

A) 14.15 percent
B) 16.15 percent
C) 11.45 percent
D) 22.00 percent
E) None of the choices are correct

F) C) and D)
G) A) and D)

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Question 33

Multiple Choice

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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 2020, how much federal tax will he owe? (Round your final answer to the nearest whole dollar.) (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 2020, what is his effective tax rate? (Round your final answer to two decimal places.) (Use tax rate schedule.)

If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for 2020? (Use tax rate schedule.)

Junior earns $80,000 taxable income as a regional circuit stock car driver and is taxed at an average rate of 25 percent (i.e., $20,000 of tax). If Congress increases the income tax rate such that Junior's average tax rate increases from 25 percent to 30 percent, how much more income tax will he pay assuming that the income effect is larger than the substitution effect? What effect will this tax rate change have on the tax base and tax collected? What will happen to the government's tax revenues if Junior chooses to spend more time pursuing his other passions besides work (e.g., earns only $60,000 in taxable income)in response to the tax rate change? What is the term that describes this type of reaction to a tax rate increase? (Round your answers to two decimal places.)

Ricky and Lucy are debating several types of taxes. Their debate has focused on the different types of tax rate structures and whether they are "fair." Please define each tax rate structure, provide examples of each structure, and discuss how each structure may be viewed with respect to vertical equity.

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

Sin taxes are:

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

The largest federal tax, in terms of revenue collected, is the Social Security tax.

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

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?

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

A common example of an employment-related tax is the Medicare tax.

Implicit taxes are indirect taxes on tax-favored assets.

Which of the following statements is true?

The 9 ^th Amendment to the U.S. Constitution removed all doubt that a federal income tax was allowed under the U.S. Constitution.

Tax policy rarely plays an important part in presidential campaigns.

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 2020? (Use tax rate schedule.)