MAT 1340 Midterm
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Arapahoe Community College *
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Course
1340101
Subject
Economics
Date
Apr 29, 2024
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7
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Midterm Assignment-
For this assignment we will be looking at personal income taxes.
In 2017 it was normal to
be able to have “deductions” and a “personal exemption” deducted from one’s total income
before determining their
taxable
income.
For the purposes of this activity, we will consider
only a “single” filing status.
In 2017, the standard deduction was $6,350 and the personal exemption was $4,050.
So,
an individual who brought in a
total income
of $30,000 would have to pay taxes on
$19,600 ($30,000-$6,350-$4050).
The $19,600 represents their
taxable income
.
Note:
Taxable Income
refers to income after accounting for the standard deduction and personal
exemption.
Total Income
refers to income prior to the standard deduction and personal exemption.
Grading:
Category
Details
Points
Part 1: Hypothetical Tax Code 1
5 questions, 3 points each.
15
Part 2: Hypothetical Tax Code 2
6 questions, 2.5 points each.
15
Part 3: House Tax Plan
5 questions, 3 points each.
15
Overall Submission
Format, Presentation, Readability
5
TOTAL
50
Part 1: Hypothetical Tax Code 1
Consider a simplified version of the real tax code.
Assume that the tax rate on all taxable
income is 15% and the standard deduction ($6,350) and personal exemption ($4,050) still
apply.
1.
If your
total income
before exemptions was $35,000, what is your
taxable
income
?
$24,600
2.
How much would you have to pay in taxes on this income?
$3690
3.
What percentage of your
total income
would you pay in taxes?
10.5%
4.
Write a function to model the total tax paid, T(x), with a
total income
of x dollars.
T(x)= 0.15 (x- 10,400)
T(x)=.15x -1560
5.
How many different slopes are on this graph (below)? What do they represent?
Below a graph that shows taxes paid as a function of
total income
for the total income
between $0 and $60,000:
T(x)= (0,
0
≤ x ≤ 10,400)
(.15x -1560,
10,400 ≤ x ≤ 60,000 )
I’m sorry I was not able to figure out how to make the function.
There will be two slopes,
From 0 -10,400: a flat slope
From 10,400-60,000: a steep slope representing the 15%
Part 2: Hypothetical Tax Code 2:
Now consider another hypothetical tax code. Assume the tax rate on the
first $15,000 of taxable income is 10% and the tax rate on any additional
income is 18%. The standard deduction ($6,350) and personal
exemption ($4,050) still apply.
In other words:
• For
taxable income
from $0 to $15,000, you pay 10% of your taxable
income in taxes, plus
• For
taxable income
above $15,000, you pay 18% of your taxable
income.
1. If your
total income
before exemptions were $10,000 how
much would you pay in taxes?
$1,000
2. If your
total income
were $20,000 how much would you pay in
taxes?
$2,400
3. If your
total income
were $50,000 how much would you pay in
taxes?
$7,800
4. Write a function to model the total tax paid, T(x), with a
total
income
of x dollars.
T(x)= .10(x-10400)
T(x)= .18(x-10400)
5. Create a graph that shows taxes paid as a function of total
income for the total income between $0 and $60,000.
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