Question 1

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 2

If Manny earns an additional $35,000 in taxable income in year 2014, what is his marginal tax rate (rounded)  on this income?

Accepted Answer

A)   22.49%
B)   28.00%
C)   25.91%
D)   25.00%
E)   None of theseF) C) and D)
G) B) and C)

Question 3

Which of the following is true regarding tax-advantaged assets?

Accepted Answer

A)   They are typically subject to excise taxes to account for their low explicit taxes
B)   A corporate bond is typically considered a tax-advantaged asset
C)   They are often subject to implicit taxes
D)   A corporate bond is typically considered a tax-advantaged asset and they are often subject to implicit taxes are correct but not they are typically subject to excise taxes to account for their low explicit taxes
E)   None of theseF) C) and D)
G) B) and D)

Question 4

Which of the following is false?

Accepted Answer

A)   A proportional tax rate structure imposes a constant tax rate while a progressive tax rate structure imposes an increasing marginal rate related to the tax base
B)   The average tax rate changes under a proportional tax rate structure, but it is static for a progressive tax rate system
C)   An example of a proportional tax is the tax on gasoline
D)   An example of a progressive tax is the federal tax on gifts
E)   None of theseF) A) and E)
G) C) and E)

Question 5

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 specifi...

Question 6

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

Accepted Answer

A)   Convenience
B)   Certainty
C)   Economy
D)   Equity
E)   None of theseF) A) and D)
G) C) and D) A

Question 7

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is true regarding real property taxes and personal property taxes?

Accepted Answer

A)   Personal property taxes are assessed on permanent structures and land
B)   Real property taxes are assessed on cars and boats
C)   All U.S. states currently impose personal property taxes
D)   Real property taxes are generally easier to administer than personal property taxes
E)   None of these is trueF) All of the above
G) A) and B)

Question 9

If Leonardo and his wife file married filing jointly in 2014, what would be their average tax rate (rounded) ?

Accepted Answer

A)   15.00%
B)   25.00%
C)   18.63%
D)   23.73%
E)   None of theseF) C) and D)
G) A) and E)

Question 10

If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?

Accepted Answer

A)   5.04%
B)   7.00%
C)   6.48%
D)   2.52%
E)   None of theseF) All of the above
G) C) and D) C

Question 11

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

Accepted Answer

A)   Proportional
B)   Equitable
C)   Regressive
D)   Progressive
E)   All of these are different kinds of the basic tax rate structuresF) C) and D)
G) A) and B)

Question 12

What is Curtis's after-tax rate of return on the city of Athens bond?

Accepted Answer

A)   1.96%
B)   2.52%
C)   7.00%
D)   9.00%
E)   None of theseF) B) and D)
G) A) and B)

Question 13

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.

Accepted Answer

Employment taxes consist of the Old Age,...

Question 14

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

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

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

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true?

Accepted Answer

A)   A regressive tax rate structure imposes an increasing marginal tax rate as the tax base increases
B)   Regressive tax structures are the most common tax rate structure
C)   An example of a regressive tax is an excise tax
D)   In terms of effective tax rates, a sales tax can be viewed as a regressive tax
E)   None of theseF) A) and B)
G) B) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

How much money would Leonardo and Theresa save if they filed jointly instead of separately for year 2014?

Accepted Answer

A)   Nothing
B)   $167.50
C)   $309.75
D)   $5,907.00
E)   None of theseF) A) and D)
G) A) and C)

Question 20

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 2014, 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%)

Accepted Answer

Fred and Wilma will owe $16,712.50 in federal income tax this year computed as follows:
$16,712.50 = $10,162.50 + (25% × ($100,000 - $73,800)).
Fred and Wilma's average tax rate is 16.71%. $$\text { Average Tax Rate } = \frac { \text { TotalTax } } { \text { TaxableIncome } } = \frac { \$ 16,712.50 } { \$ 100,000 } = 16.71 \%$$ Fred and Wilma's effective tax rate is 13.93%. $$\text { Effective Tax Rate } = \frac { \text { TotalTax } } { \text { TotalIncome } } = \frac { \$ 16,712.50 } { ( \$ 100,000 + \$ 20,000 ) } = 13.93 \%$$ Fred and Wilma are currently in the 25% 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 25.00%. $$\text { Marginal Tax Rate } = \frac { \Delta \text { Tax } } { \Delta \text { TaxableIncome } } = \frac { ( \$ 26,712.50 - \$ 16,712.50 ) } { ( \$ 140,000 - \$ 100,000 ) } = 25.00 \%$$

Exam 1: An Introduction to Tax

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

If Manny earns an additional $35,000 in taxable income in year 2014, what is his marginal tax rate (rounded) on this income?

Correct Answer
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Which of the following is true regarding tax-advantaged assets?

Correct Answer
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Which of the following is false?

Correct Answer
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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 specifi...
View Answer

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

Correct Answer
verified
A

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Correct Answer
verified

Which of the following is true regarding real property taxes and personal property taxes?

Correct Answer
verified

If Leonardo and his wife file married filing jointly in 2014, what would be their average tax rate (rounded) ?

Correct Answer
verified

If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?

Correct Answer
verified
C

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

Correct Answer
verified

What is Curtis's after-tax rate of return on the city of Athens bond?

Correct Answer
verified

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.

Correct Answer
verified
Employment taxes consist of the Old Age,...
View Answer

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

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

Correct Answer
verified

How much money would Leonardo and Theresa save if they filed jointly instead of separately for year 2014?

Correct Answer
verified

Exam 1: An Introduction to Tax

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

If Manny earns an additional $35,000 in taxable income in year 2014, what is his marginal tax rate (rounded) on this income?

Correct AnswerverifiedShow Answer

Which of the following is true regarding tax-advantaged assets?

Correct AnswerverifiedShow Answer

Which of the following is false?

Correct AnswerverifiedShow Answer

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 specifi...View AnswerShow Answer

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

Correct AnswerverifiedA

A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.

Correct AnswerverifiedShow Answer

Which of the following is true regarding real property taxes and personal property taxes?

Correct AnswerverifiedShow Answer

If Leonardo and his wife file married filing jointly in 2014, what would be their average tax rate (rounded) ?

Correct AnswerverifiedShow Answer

If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this investment?

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

What is Curtis's after-tax rate of return on the city of Athens bond?

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedEmployment taxes consist of the Old Age,...View AnswerShow Answer

In a regressive tax rate system, the marginal tax rate will often be greater than the average tax rate.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

How much money would Leonardo and Theresa save if they filed jointly instead of separately for year 2014?

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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a. not a tax because receiving a specifi...
View Answer

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A

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C

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Correct Answer
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Correct Answer
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Employment taxes consist of the Old Age,...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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