Details in images You are a world traveler that made afortune writing a series of novels. You earnmore or less the same amount of incomeevery year, $100,000, through book sales.Because you love traveling around theworld, you decide to relocate to anothercountry. When meeting with youraccountant, he explains to you that whereyou relocate will impact how much incometax you must pay on your annual income.You narrowed down your choices to threelocations, and your accountant found thefollowing tax information for you.Country 1: Czech RepublicIncome level ($) Marginal tax rateAll15%country 2: CanadaIncome level ($) Marginal tax rate0-40,00020%40,000-60,000 30%60,000-100,000 50%Over 100,000 55% Country 3: RussiaIncome level ($) Marginal tax rate0-20,00050%40%20%Over 100,000 10%20,000-50,00050,000-100,000Required:1. Determine whether each of thesecountries has a progressive, proportional,or regressive tax system.2. Calculate the estimated annual incometax in each country. Where would you paythe least amount of taxes?

Answered: You are a world traveler that made a…

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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You are a world traveler that made a
fortune writing a series of novels. You earn
more or less the same amount of income
every year, $100,000, through book sales.
Because you love traveling around the
world, you decide to relocate to another
country. When meeting with your
accountant, he explains to you that where
you relocate will impact how much income
tax you must pay on your annual income.
You narrowed down your choices to three
locations, and your accountant found the
following tax information for you.
Country 1: Czech Republic
Income level ($) Marginal tax rate
All
15%
country 2: Canada
Income level ($) Marginal tax rate
0-40,000
20%
40,000-60,000 30%
60,000-100,000 50%
Over 100,000 55%

Country 3: Russia
Income level ($) Marginal tax rate
0-20,000
50%
40%
20%
Over 100,000 10%
20,000-50,000
50,000-100,000
Required:
1. Determine whether each of these
countries has a progressive, proportional,
or regressive tax system.
2. Calculate the estimated annual income
tax in each country. Where would you pay
the least amount of taxes?

Expert Solution

Step 1

The taxpayers pay taxes to the government on income earned. The tax rate is different in every country. Some country charges higher tax on low-income taxpayers while some country charges the same tax rate for all taxpayers.

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