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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 $117,000, and the Jones had total taxable income of $58,500. 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. b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to the Joneses' taxes. What does this demonstrate about the federal income 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 $117,000, and the Jones had total taxable income of $58,500. 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. b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to the Joneses' taxes. What does this demonstrate about the federal income tax structure?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
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 $117,000, and the Jones had total taxable income of $58,500. 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. b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to the Joneses' taxes. What does this demonstrate about the federal income tax structure? a. Using the federal tax rates given in Table 1.2 for married couples filing joint returns, the taxes for the Smiths is $ The taxes for the Joneses is $ (Round to the nearest dollar.) b. The ratio of the Smiths' to the Joneses' taxable income is (Round to two decimal places.) The ratio of the Smiths' to the Joneses' taxes is (Round to two decimal places.) What does this demonstrate about the federal income tax structure? (Choose the best answer below.) A. Those who earn higher incomes pay a lower proportion of their income in taxes. B. Those who earn higher incomes pay a higher proportion of their income in taxes. C. Those who earn lower incomes pay a higher proportion of their income in taxes. D. Everyone pays the same proportion of their income in taxes. (Round to the nearest dollar.)
Transcribed Image Text: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 $117,000, and the Jones had total taxable income of $58,500. 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. b. Calculate and compare the ratio of the Smiths' to the Joneses' taxable income and the ratio of the Smiths' to the Joneses' taxes. What does this demonstrate about the federal income tax structure? a. Using the federal tax rates given in Table 1.2 for married couples filing joint returns, the taxes for the Smiths is $ The taxes for the Joneses is $ (Round to the nearest dollar.) b. The ratio of the Smiths' to the Joneses' taxable income is (Round to two decimal places.) The ratio of the Smiths' to the Joneses' taxes is (Round to two decimal places.) What does this demonstrate about the federal income tax structure? (Choose the best answer below.) A. Those who earn higher incomes pay a lower proportion of their income in taxes. B. Those who earn higher incomes pay a higher proportion of their income in taxes. C. Those who earn lower incomes pay a higher proportion of their income in taxes. D. Everyone pays the same proportion of their income in taxes. (Round to the nearest dollar.)
Data table (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) TABLE 1.2: Tax Rates and Income Brackets for Joint Returns (2018) Tax Rates 10% 12% 22% 24% 32% 35% 37% Taxable Income Joint Returns $0 to $19,050 $19,051 to $77,400 $77,401 to $165,000 $165,001 to $315,000 $315,001 to $400,000 $400,001 to $600,000 Over $600,000
Transcribed Image Text:Data table (Click the icon here in order to copy the contents of the data table below into a spreadsheet.) TABLE 1.2: Tax Rates and Income Brackets for Joint Returns (2018) Tax Rates 10% 12% 22% 24% 32% 35% 37% Taxable Income Joint Returns $0 to $19,050 $19,051 to $77,400 $77,401 to $165,000 $165,001 to $315,000 $315,001 to $400,000 $400,001 to $600,000 Over $600,000
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