Suppose Sam has a total taxable income of $40,000, and he must pay $3,600 in taxes for clothing purchased this year. Teresa has atotal taxable income of $60,000.The average tax rate for Sam is%.Based on Teresa's taxable income and the average tax rate you found for Sam in the prior question, calculate the minimum amount of tax Teresamust pay to achieve each tax structure listed in the following table.Type of Tax StructureProgressiveProportionalRegressiveTax Needed to Achieve Tax Structure(Dollars)

Answer: the taxable income of Sam is $ 40,000Explanation:Answer: the taxable income of Sam is$40,000…

Answered: Suppose Sam has a total taxable income…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In a hypothetical economy, Shen earns $38,000, Valerie earns $76,000, and Antonio earns $114,000 in annual income. The following table shows the annual taxable income and tax liability for these three single individuals. For example, Shen, who earns $38,000, owes $12,540 in taxes. Use the tax liability figures provided to complete the following table by computing the average tax rate for Shen, Valerie, and Antonio with an annual income of $ 38,000, $76,000, and $114,000, respectively. Taxable Income Taxable Income Tax Liability Average Tax Rate (Dollars) (Dollars) (Percent) Shen 38,000 12,540 Valerie 76,000 21,280 Antonio 114, 000 26, 220 The income tax system for this country is .
There are two individuals in a society. The federal income tax in this society is such that that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. James earns a gross income of $40,000, and Jane earns a gross income of $65,000. Out of his income, James pays $1,000 in local taxes; out of her income, Jane pays $20,000 in local taxes. Which of the following statements is true? a. The federal tax system is proportional. b. James’ total (local + federal) tax bill is greater than Jane’s total tax bill. c. The federal tax system is regressive d. The federal tax system is progressive.
12. In Taxland, the first $10,000 earned per year is exempt from taxation. Between $10,000.01 and $30,000, the tax rate is 25 percent. Between $30,000.01 and $50,000, it's 30 percent. Above $50,000, it's 35 percent. You're earning $80,000 a year. (LO18-4) a. How much in taxes will you have to pay? b. What is your average tax rate? c. What is your marginal tax rate?
In a hypothetical economy, Clancy earns $37,000, Eileen earns $74,000, and Hubert earns $111,000 in annual income. The following table shows the annual taxable income and tax liability for these three single individuals. For example, Clancy, who earns $37,000, owes $9,250 in taxes. Use the tax liability figures provided to complete the following table by computing the average tax rate for Clancy, Eileen, and Hubert with an annual income of $37,000, $74,000, and $111,000, respectively. Taxable Income Tax Liability Average Tax Rate Taxable Income (Dollars) (Dollars) (Percent) Clancy 37,000 9,250 Eileen 74,000 11,100 Hubert 111,000 11,100 The income tax system for this country is
Suppose Janet is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Janet resides. Compute the spendable income level Janet would have at each level of earned income and enter these values in the last column of the table. Earned Income from Work (Dollars) Transfer Benefits Income and Employment Taxes (Dollars) (Dollars) 0 Spendable Income (Dollars) 9.954 0 9,954 6,000 8.800 272 772 1,424 2.225 2,656 12.000 18,000 24,000 30,000 7,389 5,384 2.697 1,033 If Janet's income from work increased from $18,000 to $24.000, her implicit marginal tax rate would be If Janet's income from work increased from $24,000 to $30.000, her implicit marginal tax rate would be
The country of Aquilonia has a tax system identical to that of Canada. Suppose an Aquilonian bought a parcel of land for $10,000 in 1960 when the price index equalled 100. In 2019, the person sold the land for $100,000, and the price index equalled 500. If the person must pay 20 percent of any capital gain in taxes, what is the after-tax real capital gain (in 2019 dollars) on the land? $72,000 $32,000 O $6400 O $62,000
Consider the first three columns of the following table, which outline a hypothetical Negative Income Tax plan. Complete the last column of the table. Family Income Negative Tax Positive Tax Total After-Tax Income 50 $20,000 50 S 5,000 $15,000 0 S 10,000 $10,000 S 15,000 $5,000 0 20,000 0 0 S 25,000 0 -$5,000 30,000 35,000 OO -$10,000 S -$15,000
Assume that the government proposes a negative income tax that calculates taxes owed using the following formula: taxes owed = 0.25 Income $20,000. If a family earns an income of $60,000, how does this tax scheme affect them? they receive a subsidy of $5000 they pay $15,000 in taxes they pay $20,000 in taxes they receive an income subsidy of $15,000.
The negative income tax has been proposed as a means The negative income tax has been proposed as a means of increasing both the efficiency and the equity of Canada’s tax system (see Applying Economic Concepts 18-1 on page 465). The most basic NIT can be described by two variables: the guaranteed annual income and the marginal tax rate. Suppose the guaranteed annual income is $8000 and the marginal tax rate on every dollar earned is 35 percent. With this NIT, after-tax income is given by After-tax income = 8000 + (1 – 0.35) X (Earned income) a. On a scale diagram with after-tax income on the vertical axis and earned income on the horizontal axis, draw the NIT relationship between earned income and after-tax income. b. What is the level of income at which taxes paid on earned income exactly equal the guaranteed annual income? c. The average tax rate is equal to total net taxes paid divided by earned income. Provide an algebraic expression for the average tax…
Song earns $148,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $29,600 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: 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 $111,000 in taxable income? What is the term that describes this type of reaction to a tax rate increase? What types of taxpayers are likely to respond in this manner?

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