Consider Taxpayers A and B who are in the same marginal tax bracket because of equal salaries. They each earn an additional $20,000—Taxpayer A by working overtime and Taxpayer B by selling stock resulting in a $20,000 capital gain. Taxpayer A pays tax at the ordinary income tax rate on his additional wages while Taxpayer B benefits from the lower capital gains tax rate on his extra income by selling an investment asset. Is this equitable? Should equivalent incomes be taxed equally?
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Consider Taxpayers A and B who are in the same marginal tax bracket because of equal salaries. They each earn an additional $20,000—Taxpayer A by working overtime and Taxpayer B by selling stock resulting in a $20,000
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- Consider the following hypothetical income tax brackets for a single taxpayer. Assume for simplicity there are no exemptions or deductions. Income $0-$10,000 $10,000-$40,000 $40,000-$100,000 Over $100,000 Is this tax regressive, progressive, or proportional? The income tax is progressive Suppose Susan's income is $30,000. How much will she pay in income taxes? Susan will pay $ in income taxes. (Enter your response as an integer) Tax Rate 10% 20 35 50What is the maximum investment income a taxpayer is allowed to have and still be allowed to claim the earned income credit?$ Why is there an investment income limit in the tax law regarding the credit? The earned income credit is meant to assistWhat would be the marginal tax rate for a married couple with income of $90, 800 bWhat would be the average tax rate for married couple with income of $90, 800? What would be the marginal tax rate for an unmarried taxpayer with income of $ 90,800? What would be the average tax rate for an unmarried taxpayer with income of $90,800 ?
- n each of the following cases, discuss how the taxpayers might respond to a tax rate increase in a manner consistent with the income effect. a. Mr. Edwards earns $32,000 a year as an employee, and Mrs. Edwards doesn’t work.b. Mr. Frank earns $22,000 a year as an employee, and Mrs. Frank earns $10,000 a year as a self-employed worker.c. Mr. George earns $22,000 a year as an employee, and Mrs. George earns $10,000 a year as an employee.Individuals and firms pay out a significant portion of their income as taxes, so taxes are important in both personal and corporate decisions. Our tax system is progressive. Individual Individuals pay taxes on wages, on investment income, and on the profits of proprietorships and partnerships. Taxable income is defined as gross income less a set of deductions. In 2018, the personal exemption is for taxpayers and their dependents is zero. A capital gain (loss) is the profit (loss) from the sale of a capital asset for more (less) than its purchase price. In 2018, for most taxpayers a -Select- ✓ capital gain is taxed at a maximum rate of 15%, while a -Select- capital gain is taxed as ordinary income [for high-income taxpayers the tax rate on long-term capital gains is 20% ]. -Select- ✓income consists of dividend and interest income. Interest income (except interest on state and local government debt which is exempt from federal taxes) is taxed as -Select- while dividends are taxed at the…Which of the following statements is NOT true? A) A progressive tax system should increase the incentive for people to take low paid jobs. B) With a progressive tax system, the more a person earns, the higher the average rate of tax will be. C) A progressive tax is a type of tax that is assessed regardless of income. D) A progressive tax takes a higher percentage of tax from people with higher incomes.
- If you earn enough extra income to be placed in a higher tax bracket and have a higher marginal tax rate, the new rate will be applied to all of your taxable income. a. true b. falseWhat would be the marginal and average tax rates for a married couple with taxable income of $89,600? For an unmarried taxpayer with the same income? Use Table 3.7. (Do not round intermediate calculations. Enter the marginal tax rate as a percent rounded to 1 decimal place. Enter the average tax rate as a percent rounded to 1 decimal place.) a. What would be the marginal tax rate for a married couple with income of $89,600? Marginal tax rate for a married couple b. What would be the average tax rate for a married couple with income of $89,600? Average tax rate for a married couple % Marginal tax rate for an unmarried taxpayer c. What would be the marginal tax rate for an unmarried taxpayer with income of $89,600? % Average tax rate for an unmarried taxpayer % d. What would be the average tax rate for an unmarried taxpayer with income of $89,600? %For tax purposes, "gross income" is all the money “taxable income" rather than gross income. The difference between the two is the result of many exemptions and deductions. To see how they work, suppose you made $60,000 last year in wages, earned $10,000 from investments, and received a gift of $5,000 from your grandmother. Also assume that you are a single parent with one small child living with you. person receives in a given year from any source. But income taxes are levied on Instructions: Enter your answers as a whole number. a. What is your gross income? $ b. Gifts of up to $15,000 per year from any person are not counted as taxable income. Also, the personal exemption allows you to reduce your taxable income by $4,050 for each member of your household. Given these exemptions, what is your taxable income? 2$ c. Next, assume you paid $700 in interest on your student loans last year, put $2,000 into a health savings account (HSA), and deposited $4,000 into an individual…
- If husband and wife are both employed, which is correct regarding their income tax exemption in the tax table? A. Each spouse shall be entitled to a P250,000 income tax exemption in the tax table. B. Each spouse is allowed P500,000 income tax exemption in the tax table C. Either the husband or the wife can take advantage of the P500,000 income exemption in the tax table. D. Only the husband shall be allowed P250,000 income tax exemption in the tax table. What is the basis of the computation of the optional income tax? A. Net taxable income B. Goss sales/receipt in excess of P250,000 C. Net compensation income D. Gross sales/receipt As a rule non-profit, non-stock corporations are exempt from income tax. which of these non-profit entities is subject to income tax? A. Association B. School C. Farmers' cooperative D. Hospital Benguet State University, a public educational institution, is: A. Subject to income tax…Credits and deductions both reduce your tax bill, but they work differently. A credit erases money from the amount you owe. You save the full amount. A deduction reduces your taxable income ONLY IF you itemize deductions. You save a percentage of the deduction depending on your tax bracket. If you don't itemize, it's worthless. Example: Josie is in the 25% tax bracket and itemizes her deductions. She qualifies for a $500 credit for her new insulated windows, and also a $500 deduction for mortgage interest. - Credit: Josie saves the full $500 - Deduction: Josie's taxable income is reduced by $500. If she had to pay tax on that $500 she would pay 25% of $500 = $125, so she saves $125. How much more does the credit save Josie than the deduction?Suppose that the income tax in a certain nationis computed as a flat rate of 5 percent, but notax is levied above $50,000 in taxable income.Taxable income, in turn, is computed as theindividual's income minus $10,000; that is,everyone gets a $10,000 deduction. What arethe marginal and average tax rates for each ofthe following three workers? (Evaluate the mar-ginal tax rate at each person's current incomelevel.)a.A part-time worker with annual income of$9,000.b.A retail salesperson with annual income of$45,000.C.An advertising executive with annual incomeof $600,000.Is the tax progressive, proportional, or regres-sive with respect to income?