Use the graph on the right to answer the following question. Alan earns $235,000 per year and is considering a second job that would earn him another $15,000 annually. At what rate will his tax liability (the amount he must pay in taxes) change if he takes the extra job? Express your answer in tax dollars paid per dollar earned. His tax liability will change by about $ per dollar earned. 50%- 40- 30- 20- 10- Marginal tax rate (percentage) 50 100 150 200 250 300 Annual income (in thousands of doll

Use the graph on the right to answer the following question. Alan earns $235,000 per year and is considering a second job that would earn him another $15,000 annually. At what rate will his tax liability (the amount he must pay in taxes) change if he takes the extra job? Express your answer in tax dollars paid per dollar earned. His tax liability will change by about $ per dollar earned. 50%- 40- 30- 20- 10- Marginal tax rate (percentage) 50 100 150 200 250 300 Annual income (in thousands of doll

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

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter1: Federal Income Taxation—an Overview

Section: Chapter Questions

Problem 44P

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25. Alan earns $85,000 per year and is considering a second job that would earn him another $10,000 annually. At what rate will his tax liability (the amount he must pay in taxes) change if he takes the extra job? Express your answer in tax dollars paid per dollar earned.
Suppose you return to college and earn an MBA, after which you get a middle-management position with General Mills, the firm that makes Lucky Charms and other breakfast cereals. If the tax rates are the same as in 2018 and your starting salary is $90,000, how much will General Mills pay on your behalf in federal social insurance taxes? between $7,000 and $8,000 less than $7,000 O between $9,000 and $10,000 between $8,000 and $9,000 more than $10,000
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4. Suppose that Thomas Lee is enrolled in a defined contribution plan in which the employer contributes $8,000 each year. Thomas is earning $80,000 this year and his tax rate is 30 percent (which is not expected to change). Assume that the before- tax rate of return is 8 percent. (a)What is the additional amount of funds that Thomas will have when he reaches retirement in 10 years as a result of this year's service? (b) Suppose that Thomas's employer is planning to reduce half of their contribution to the defined contribution plan. Assume that Thomas would like to keep his retirement funds the same as they would have been with the defined contribution plan. If Thomas's only opportunity to save for retirement is in a nonqualified savings plan (no tax benefits), how much would Thomas need to receive in additional salary (which he would then save) to achieve his objective?
Suppose that Thomas Lee is enrolled in a defined contribution plan in which the employer contributes $8,000 each year. Thomas is earning $80,000 this year and his tax rate is 30 percent (which is not expected to change). Assume that the before- tax rate of return is 8 percent. (a) What is the additional amount of funds that Thomas will have when he reaches retirement in 10 years as a result of this year's service? (b) Suppose that Thomas's employer is planning to reduce half of their contribution to the defined contribution plan. Assume that Thomas would like to keep his retirement funds the same as they would have been with the defined contribution plan. If Thomas's only opportunity to save for retirement is in a nonqualified savings plan (no tax benefits), how much would Thomas need to receive in additional salary (which he would then save) to achieve his objective?
1. If Dave and his employer contribute a total of $10,000 annually, how much will that amount accumulate to over the next 30 years, at which time Dave and Sharon hope to retire? Future Value of Annuity Contribution Years Annual rate of return Future value $10,000 30 7.00% $944,607.86 2. Assuming that Dave's marginal tax bracket is 25 percent, by how much should his federal taxes decline this year if he contributes $7,000 to his retirement account? 3. The Sampsons' tax bracket has not changed. Assuming that Dave contributes $7,000 to his retirement account and that his taxes are lower as a result, by how much are Dave's cash flows reduced over the coming year? (Refer to your answer in question 2 when solving this problem.) 4. If Dave contributes $7,000 to his retirement account, he will have less cash inflows as a result. How can the Sampsons afford to make this contribution? Suggest some ways that they may be able to offset the reduction in cash inflows.
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Suppose people can live in two periods. In the first period people are young and they work. Each earns $20,000, and the payroll tax is 10%. In the second period, people are old and they retire. Retirees rely on social security benefits. The social security system is a combination of a funded pension and an unfunded investment, and the interest rate is 4%. People get the investment back when they retire. For the unfunded part, 50% of the payroll tax collected from young workers are paid to retirees immediately. In each period, the number of people grows by 5%, and the wage grows by 5%. In period 1 there are 100 young workers (first generation). In period 2, the first generation can get benefits from the social security program. Question: compute the benefit that a retiree of the first generation can get in period 2.
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