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Exam 1: An Introduction to Tax

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Question 51

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Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. How much money would Leonardo and Theresa save if they file jointly instead of separately for 2019? (Use tax rate schedule.)

A) Nothing
B) $103.50
C) $309.75
D) $5,932.50
E) None of the choices are correct.

F) All of the above
G) B) and D)

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Question 52

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A sales tax is a common example of a progressive tax rate structure.

A) True
B) False

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Question 53

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The substitution effect:

Which of the following is considered a tax?

Which of the following principles encourages a vertically equitable tax system?

Estimated tax payments are one way the federal income tax system addresses the "certainty" criterion in evaluating tax systems.

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. What is Curtis's after-tax rate of return on the city of Athens bond?

The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type of tax is this?

Which of the following is true regarding use taxes?

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo earned an additional $30,000 of taxable income this year, what would be the marginal tax rate (rounded) on the extra income for 2019? (Use tax rate schedule.)

A common example of an employment-related tax is the Medicare tax.

Excise taxes are typically levied on the value of a good purchased.

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo instead had $30,000 of additional tax deductions for 2019, his marginal tax rate (rounded) on the deductions would be: (Use tax rate schedule.)

One key characteristic of a tax is that it is a required payment to a governmental agency.

The ultimate economic burden of a tax is best captured by:

Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively, Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 24 percent. How much implicit tax would Curtis pay on the city of Athens bond?

If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer for 2019? (Use tax rate schedule.)

Jed Clampett is expanding his family-run beer distributorship into Georgia or Tennessee. His parents began the business many years ago and now three generations of Clampetts work in the family business. Jed will relocate the entire family (his parents, spouse, children, etc.)to either state after the move. What types of taxes may influence his decision of where to locate his business? What nontax factors may influence the decision?

George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.

Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical equity is defined in terms of taxpayers in different situations.