Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
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Chapter 1, Problem 4AP
This year, State A raised revenues by increasing its general sales tax rate from 5 percent to 6 percent. Because of the increase, the volume of taxable sales declined from $800 million to $710 million. In contrast, State Z raised revenues from its 5 percent sales tax by expanding the tax base to include certain retail services. The volume of services subject to tax was $50 million. Compute the additional revenue raised by State A and by State Z.
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Jurisdiction B’s tax system consists of a 6.5 percent general sales tax on retail goods and selected services. Over the past decade, the average annual volume of sales subject to this tax was $1,100 million. The jurisdiction needs to increase its tax revenues by approximately $11.0 million each year to finance its spending programs. The taxing authorities are considering two alternatives: a 1 percent increase in the sales tax rate or a new 2 percent tax on the net income of corporations doing business in the jurisdiction. Based on recent economic data, the annual net income subject to the new tax would be $575 million. However, the jurisdiction would have to create a new agency responsible for enforcing and collecting the income tax. The estimated annual cost of the agency is $500,000. Jurisdiction B borders four other taxing jurisdictions, all of which have a general sales tax and two of which have a corporate income tax.
Required:
1. Based on a static forecast, how much incremental…
A state decided to increase its sales tax from 6.25% in 2010 to 6.5% in 2011. If the total value of goods sold in the state was $4 million in 2010 and $3.9 million in 2011, which of the following statements best describes the change in sales tax revenue of the state from 2010 to 2011?Â
A) From 2010 to 2011, the sales tax revenue increased by $3,500.
B) From 2010 to 2011, the sales tax revenue increased by $2,000.
C) From 2010 to 2011, the sales tax revenue decreased by $2,500.
D) From 2010 to 2011, the sales tax revenue decreased by $7,500.
Jurisdiction B levies a flat 7 percent tax on the first $5 million of annual corporate income.
a. Jersey Inc. generated $3.6 million income this year. Compute Jersey's income tax and determine its average and
marginal tax rate on total income.
b. Leray Inc. generated $9.2 million income this year. Compute Leray's income tax and determine Leray's average and
marginal tax rate on total income.
c. What type of rate structure does Jurisdiction B use for its corporate income tax?
Complete this question by entering your answers in the tabs below.
Required A Required B Required C
Jersey Inc. generated $3.6 million income this year. Compute Jersey's income tax and determine its average and
marginal tax rate on total income. (Enter income tax answer in dollars not in millions of dollars.)
Income tax
Average tax rate
Marginal tax rate
%
%
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Chapter 1 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 1 - Prob. 1QPDCh. 1 - Prob. 2QPDCh. 1 - Prob. 3QPDCh. 1 - Prob. 4QPDCh. 1 - Prob. 5QPDCh. 1 - A local government imposed a new 2 percent tax on...Ch. 1 - Prob. 7QPDCh. 1 - Prob. 8QPDCh. 1 - Prob. 9QPDCh. 1 - Prob. 10QPD
Ch. 1 - Prob. 11QPDCh. 1 - Prob. 12QPDCh. 1 - Prob. 13QPDCh. 1 - Prob. 14QPDCh. 1 - One way for the federal government to increase tax...Ch. 1 - The Internal Revenue Code and Treasury regulations...Ch. 1 - Mr. Josh Kenney, a U.S. citizen and resident of...Ch. 1 - Prob. 2APCh. 1 - Prob. 3APCh. 1 - This year, State A raised revenues by increasing...Ch. 1 - Prob. 5APCh. 1 - Prob. 6APCh. 1 - Prob. 7APCh. 1 - Prob. 8APCh. 1 - Prob. 9APCh. 1 - Mrs. Doyle, a resident of Rhode Island, traveled...Ch. 1 - Prob. 11APCh. 1 - Prob. 12APCh. 1 - Mr. and Mrs. Underhill operate a hardware store in...Ch. 1 - Prob. 14APCh. 1 - Wallis Company produces circuit boards in a...Ch. 1 - Prob. 1IRPCh. 1 - Prob. 2IRPCh. 1 - Bailey Company, which has offices in six states,...Ch. 1 - Prob. 4IRPCh. 1 - Yarrow Company orders 500,000 of office furniture...Ch. 1 - Acme Corporation was formed under the laws of...Ch. 1 - Prob. 7IRPCh. 1 - Prob. 8IRPCh. 1 - Prob. 9IRPCh. 1 - Mr. Imhoff, age 72, has lived in Los Angeles his...Ch. 1 - Prob. 1TPCCh. 1 - KTR Company earns a 10 profit on each unit of...
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