During 2018, the Smiths and the Joneses both filed joint tax returns. For the tax year ended December 31, 2018, the Smiths' taxable income was $130,000, and the Joneses had total taxable income of $65,000. a. Using the federal tax rates given in Table 1.2 for married couples filing joint returns, calculate the taxes for both the Smiths and the Joneses family. b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to Joneses' taxes. What does this demonstrate about the federal tax structure?
During 2018, the Smiths and the Joneses both filed joint tax returns. For the tax year ended December 31, 2018, the Smiths' taxable income was $130,000, and the Joneses had total taxable income of $65,000. a. Using the federal tax rates given in Table 1.2 for married couples filing joint returns, calculate the taxes for both the Smiths and the Joneses family. b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to Joneses' taxes. What does this demonstrate about the federal tax structure?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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During 2018, the Smiths and the Joneses both filed joint tax returns. For the tax year ended December 31, 2018, the Smiths' taxable income was $130,000, and the Joneses had total taxable income of $65,000.
a. Using the federal tax rates given in Table 1.2 for married couples filing joint returns, calculate the taxes for both the Smiths and the Joneses family.
b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to Joneses' taxes. What does this demonstrate about the federal tax structure?
Table 1.2
| Taxable Income | ||
|---|---|---|
| Tax Rates | Individual Returns | Joint Returns |
| 10% | $0 to $9,525 | $0 to $19,050 |
| 12% | $9,526 to $38,700 | $19,051 to $77,400 |
| 22% | $38,701 to $82,500 | $77,401 to $165,000 |
| 24% | $82,501 to $157,500 | $165,001 to $315,000 |
| 32% | $157,501 to $200,000 | $315,001 to $400,000 |
| 35% | $200,001 to $500,000 | $400,001 to $600,000 |
| 37% | Over $500,000 | Over $600,000 |
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