"Mr. and Mrs. Jerald own a dry cleaning business that generates $125,000 taxable income each year. For the past few years, the couple’s federal tax rate on this income has been 32 percent. Congress recently increased the tax rate for next year to 40 percent. Based on a static forecast, how much additional revenue will the federal government collect from Mr. and Mrs. Jerald next year? How much additional revenue will the government collect if Mr. and Mrs. Jerald respond to the rate increase by working harder and earning $140,000 next year? How much additional revenue will the government collect if Mr. and Mrs. Jerald respond to the rate increase by working less and earning only $110,000 next year? "

"Mr. and Mrs. Jerald own a dry cleaning business that generates $125,000 taxable income each year. For the past few years, the couple’s federal tax rate on this income has been 32 percent. Congress recently increased the tax rate for next year to 40 percent. Based on a static forecast, how much additional revenue will the federal government collect from Mr. and Mrs. Jerald next year? How much additional revenue will the government collect if Mr. and Mrs. Jerald respond to the rate increase by working harder and earning $140,000 next year? How much additional revenue will the government collect if Mr. and Mrs. Jerald respond to the rate increase by working less and earning only $110,000 next year? "

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter4: Income Exclusions

Section: Chapter Questions

Problem 72IIP

See similar textbooks

Similar questions

7) Ms. Benoit is a self-employed architect who earns $300,000 annual taxable income. For the past several years, her tax rate on this income has been 35 percent. Because of recent tax law changes, Ms. Benoit’s tax rate for next year will decrease to 25 percent. a) Based on a static forecast, how much less revenue will the government collect from Ms. Benoit next year? b) How much less revenue will the government collect from Ms. Benoit next year if she responds to the rate decrease by working more hours and earning $375,000 taxable income? c) How much less revenue will the government collect from Ms. Benoit next year if she responds to the rate decrease by working fewer hours and earning only $275,000 taxable income?
"Mrs. King, a single taxpayer, earns a $42,000 annual salary and pays 15 percent in state and federal income tax. If tax rates increase so that Mrs. King’s annual tax rate is 20 percent, how much additional income must Mrs. King earn to maintain the same after-tax disposable income?"
The Roosevelt's are financially savvy and want to take advantage of the principle of bunching. Assume for this problem, that the Roosevelts expect to pay $14,000 in tithing and $8,000 in state and local taxes for the next few years (these are their only itemized deductions). How much would bunching save them over the course of two years if their marginal tax rate is 22%? (The standard deduction for a married filing jointly taxpayer is $24,000.) $12,000 $4,840 $3,080 $3,542 $2,640 O None of the Above
Dick DeWolf and his wife have a total taxable income of $60,000 this year and file a joint federal income tax return. If inflation continues for the next 20 years at a 5% annual rate, Dick wonders what their taxable income must be to provide the same purchasing power after taxes. Assuming the federal income tax rate table is unchanged, what must their taxable income be 20 years from now?
"At the beginning of the year, Mr. Lanier put $50,000 cash into Investment X. At the end of the year, he received a check for $2,800, representing his annual return on the investment. Mr. Lanier’s marginal tax rate on ordinary income is 37 percent. However, his return on Investment X is a capital gain taxed at 20 percent. Compute the value of the preferential rate to Mr. Lanier. "
Ruth has asked for help in determining whether she should receive her $32,500 bonus check in the current year or next year. In the current year, her marginal tax rate is 24% and she anticipates she will be in the 32% marginal tax bracket next year. What advice can you give Ruth? Net revenue from bonus $ Current year Ruth should choose to receive her bonus in the ✓year. Next year
Song earns $150,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $30,000 of tax). Answer the questions below assuming that Congress increases the income tax rate such that Song's average tax rate increases from 20 percent to 25 percent. Required: a. What will happen to the government's tax revenues if Song chooses to spend more time pursuing her other passions besides work in response to the tax rate change and therefore earns only $112,500 in taxable income? b. What is the term that describes this type of reaction to a tax rate increase? c. What types of taxpayers are likely to respond in this manner? Complete this question by entering your answers in the tabs below. Required A Required B Required C What types of taxpayers are likely to respond in this manner? Type of taxpayers Taxpayers with less disposable income Taxpayers with more disposable income d C
Song earns $100,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $20,000 of tax). If congress increases the income tax rate such that Song’s average tax rate increases from 20 percent to 25 percent, how much more income tax will she pay assuming that the income effect is descriptive? What effect will this tax rate change have on the tax base and tax collected?
Last year, Mrs. Washington had a taxable income of $61,000 and paid about 20% in taxes. This year contributed $4,200 to a traditional IRA. About how much could her tax liability be reduced? she Type your answer...
* Your answer is incorrect. Anthony lives in Tacoma and frequently travels to Los Angeles for business. He incurs the following expenses for the current year: Airfare $5,000 Lodging Meals $250 per day $81 per day Anthony's business days for the year total 20 days and his personal days while traveling total 8 days. How much travel expense can Anthony deduct on his tax return assuming that each trip has more than 50% of the days utilized for business activity in 2023? Deduction $ 11620
Pepa Madrigal has operated a very successful bakery for 30years, and has accumalated investment that earn annual interest income of $40,000.Her other income put her in the top income tax bracket for personal tax purposes. She has a son, Antonio who is 22 years old and currently has no income. Antonio'sonly personal tax credit is the perssonal tax credit.Determine the maount of federal incometaxes that could be saved by transfering the interest earning investments to a trust with Antonio as the income beneficiary,assuming that the trust will be required todistribute all of its income each year.
This year Lloyd, a single taxpayer, estimates that his tax liability will be $12,400. Last year, his total tax liability was $16,600. He estimates that his tax withholding from his employer will be $9,320. Assuming Lloyd does not make any additional payments, what is the amount of his underpayment penalty? Assume the federal short-term rate is 5 percent.