Tax problems –
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1.Chuck, a single taxpayer, earns $75,250 in
taxable income and $26,250 in interest from an investment in City of Heflin
bonds. (Use the U.S.tax rate schedule.)
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a.
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If Chuck earns an
additional $64,000 of taxable income, what is his marginal tax rate on
this income?
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b.
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What is his marginal
rate if, instead, he had $64,000 of additional deductions?
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2.Jorge and Anita, married taxpayers, earn
$185,000 in taxable income and $20,000 in interest from an investment in City
of Heflin bonds. Using the U.S.tax rate schedule for married filing jointly, how much
federal tax will they owe? What is their average tax rate? What is their
effective tax rate? What is their current marginal tax rate?
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3.Song earns $257,500 taxable income as an
interior designer and is taxed at an average rate of 20 percent (i.e.,
$51,500 of tax).
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a.
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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?
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b.
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If the income effect
is descriptive, the tax base and the tax collected will increase. True or
False?
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4.Congress would like to increase tax revenues
by 12.5 percent. Assume that the average taxpayer in the United States earns
$63,000 and pays an average tax rate of 20 percent.
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a.
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If the income effect
is in effect for all taxpayers, what average tax rate will result in a 12.5
percent increase in tax revenues?
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b.
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This is an example of
what type of forecasting? Dynamic or Static?
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