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ents to his purchases and if yes, how will he adjust? If no, why not? 3. Overall, who is impacted the most by the sales tax increa

ents to his purchases and if yes, how will he adjust? If no, why not? 3. Overall, who is impacted the most by the sales tax increa

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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1. If the sales tax increases to 12%, what percentage of Jeff's income will Archie now pay in tax on his $150 bill? Show your work. 2. Will he make adjustments to his purchases and if yes, how will he adjust? If no, why not? 3. Overall, who is impacted the most by the sales tax increase? Why?
A3.06.2 Why Do We Pay Taxes Assignment (1) -... OSearch Adrian Ashford AA Draw Design Layout References Mailings Review View Help MACROECONOMICS Part II: Impact of a Sales Tax Increase Archie Windsor is a 19 year old college student at the University of Washington in Seattle. He works at Royal Foods earning $10.25/hour and his salary is used to purchase mostly goods and services such as food and basic day to day itens. Also, to save money, he does not own a car but relies on campus transportation and the local area transit system to travel. Most of his food items are purchased at his job for convenience. Archie estimates 45% of his income is spent on food and basic items. Jeff Gates is a 60 year old CEO of a major corporation and lives in Medina, Washington. His hourly salary is roughly estimated to be $4400. He purchases food, basic day to day items as well as various luxury goods. Jeff hates shopping so relies on grocery delivery services for most of his food purchases. However, he does like to attend local farmers markets and artisanal grocery stores for his favorite specialty items. He estimates 15% of his income is spent on food and basic items. The current sales tax is 10% for the city of Seattle. This means that each time Archie and Jeff purchase $150 worth of food and basic items, they must also pay $15 in sales tax.
Transcribed Image Text:A3.06.2 Why Do We Pay Taxes Assignment (1) -... OSearch Adrian Ashford AA Draw Design Layout References Mailings Review View Help MACROECONOMICS Part II: Impact of a Sales Tax Increase Archie Windsor is a 19 year old college student at the University of Washington in Seattle. He works at Royal Foods earning $10.25/hour and his salary is used to purchase mostly goods and services such as food and basic day to day itens. Also, to save money, he does not own a car but relies on campus transportation and the local area transit system to travel. Most of his food items are purchased at his job for convenience. Archie estimates 45% of his income is spent on food and basic items. Jeff Gates is a 60 year old CEO of a major corporation and lives in Medina, Washington. His hourly salary is roughly estimated to be $4400. He purchases food, basic day to day items as well as various luxury goods. Jeff hates shopping so relies on grocery delivery services for most of his food purchases. However, he does like to attend local farmers markets and artisanal grocery stores for his favorite specialty items. He estimates 15% of his income is spent on food and basic items. The current sales tax is 10% for the city of Seattle. This means that each time Archie and Jeff purchase $150 worth of food and basic items, they must also pay $15 in sales tax.
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