PRINCIPLES OF TAXATION F/BUS.+INVEST.
22nd Edition
ISBN: 9781259917097
Author: Jones
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 1TPC
1
To determine
Determine the incremental revenue that jurisdiction B will raise under each alternative.
2
To determine
Explain the additional facts that are important for dynamic forecast.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Jurisdiction B levies a flat 7 percent tax on the first $5 million of annual corporate income.
Required:
Jersey Incorporated generated $2.7 million income this year. Compute Jersey’s income tax and determine its average and marginal tax rate on total income.
Leray Incorporated generated $7.4 million income this year. Compute Leray’s income tax and determine Leray’s average and marginal tax rate on total income.
What type of rate structure does Jurisdiction B use for its corporate income tax?
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…
Compare and contrast the pros and cons of implementing an ad valorem tax and a unit tax on the retail purchase of gasoline. In the country of Taxhappya, there is a national sales tax of 8% on the sale of retail items. Annual retail sales total $1 billion. The Taxhappya legislature is proposing an increase in the national sales tax to 9.5 percent, but it is estimated that this tax increase will decrease annual retail sales by $125 million. Will this tax generate more revenue for the Taxhappya government? (SHOW YOUR WORK)
Chapter 2 Solutions
PRINCIPLES OF TAXATION F/BUS.+INVEST.
Ch. 2 - What evidence suggests that the federal tax system...Ch. 2 - Prob. 3QPDCh. 2 - National governments have the authority to print...Ch. 2 - In each of the following cases, discuss how the...Ch. 2 - Prob. 6QPDCh. 2 - Ms. V resides in a jurisdiction with a 35 percent...Ch. 2 - What nonmonetary incentives affect the amount of...Ch. 2 - Prob. 9QPDCh. 2 - Prob. 10QPDCh. 2 - Discuss the tax policy implications of the saying...
Ch. 2 - Prob. 12QPDCh. 2 - Jurisdiction E spends approximately 7 million each...Ch. 2 - Prob. 14QPDCh. 2 - Prob. 15QPDCh. 2 - Corporation R and Corporation T conduct business...Ch. 2 - Ms. P is considering investing 20,000 in a new...Ch. 2 - Country M levies a 10 percent excise tax on the...Ch. 2 - The city of Lakeland levies a 2 percent tax on the...Ch. 2 - The city of Clement levies a 5 percent tax on the...Ch. 2 - Mrs. K, a single taxpayer, earns a 42,000 annual...Ch. 2 - Prob. 5APCh. 2 - Prob. 6APCh. 2 - Prob. 7APCh. 2 - Jurisdiction B levies a flat 7 percent tax on the...Ch. 2 - Jurisdiction X levies a flat 14 percent tax on...Ch. 2 - Prob. 10APCh. 2 - Prob. 11APCh. 2 - Country A levies an individual income tax with the...Ch. 2 - Prob. 13APCh. 2 - Prob. 14APCh. 2 - Prob. 1IRPCh. 2 - Identify the tax issue or issues suggested by the...Ch. 2 - Prob. 3IRPCh. 2 - Prob. 4IRPCh. 2 - Prob. 5IRPCh. 2 - Prob. 6IRPCh. 2 - Prob. 1TPC
Knowledge Booster
Similar questions
- 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 % % Required A Required B >arrow_forwardAs the tax assessor for Indian Creek County you have been informed that due to budgetary demands, a tax increase will be necessary next year. The total market value of the property in the county is $700000000. Currently the assessment rate is 35 % and the tax rate is 40 mills. The commission increases the assessment rate to 45 % and the tax rate to 45 mills. How much property tax in dollars was collected? How much more tax will be collected under the new rate?arrow_forwardAs the tax assessor for Indian Creek County, you have been informed that due to budgetary demands, a tax increase will be necessary next year. The total market value of the property in the county is $700,000,000. Currently, the assessment rate is 35% and the tax rate is 40 mills. The county commission increases the assessment rate to 55% and the tax rate to 45 mills. (a) How much property tax (in $) was collected under the old rates? $ (b) How much more tax (in $) revenue will be collected under the new rates? $arrow_forward
- Suppose that a state has increased its sales tax rate every other year since 2008. Assume that the state collected all sales taxes that residents legally owed. The table below summarizes its experience. What were total taxable sales in this state during each year displayed in the table? (Complete the table below.) (See page 131.) Year Sales Tax Rate Sales Tax Collections Total Taxable Sales 2008 0.05 (5 percent) $12,000,000 2010 0.06 (6 percent) $16,000,000 2012 0.07 (7 percent) $23,000,000 2014 0.08 (8 percent) $28,000,000 2016 0.09 (9 percent) $34,000,000 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardAs the tax assessor for Indian Creek County, you have been informed that due to budgetary demands, a tax increase will be necessary next year. The total market value of the property in the county is $300,000,000. Currently, the assessment rate is 35% and the tax rate is 40 mills. The county commission increases the assessment rate to 55% and the tax rate to 45 mills. (a)How much property tax (in $) was collected under the old rates? (b)How much more tax (in $) revenue will be collected under the new rates?arrow_forwardA division of Midland Oil & Gas has a taxable income (TI) of $8.85 million for a tax year. If the state tax rate averages 6% for all states in which the corporation operates, find the equivalent after-tax rate of return (ROR) required of projects that are justified only if they can demonstrate a before-tax return of 22% per year. Use the table given below to calculate taxes, the average tax rate Te and after-tax ROR. If Taxable Income ($) Is: But Not Of the Over over Тax Is Amount over 50,000 15% 50,000 75,000 7,500 + 25% 50,000 75,000 100,000 13,750 + 34% 75,000 100,000 335,000 22,250 + 39% 100,000 335,000 10,000,000 113,900 + 34% 335,000 10,000,000 15,000,000 3,400,000 + 35% 10,000,000 15,000,000 18,333,333 5,150,000 + 38% 15,000,000 18,333,333 35% The equivalent after-tax ROR is determined to be %.arrow_forward
- Superior Developers sells lots for residential development. When lots are sold, Superior recognizes income for financial reporting purposes in the year of the sale. For some lots, Superior recognizes income for tax purposes when collected. In the prior year, income recognized for financial reporting purposes for lots sold this way was $20 million, which would be collected equally over the next two years. The enacted tax rate was 40%. This year, a new tax law was enacted, revising the tax rate from 40% to 35% beginning next year. Calculate the amount by which Superior should reduce its deferred tax liability this year.arrow_forwardABC Corp operates in the city and would besubjected to the following taxes: i. Federal corp income tax-surtax 26% and normal tax 22% ii. State Franchise tax-72% If income before taxes for 2018 was $370,000 per the federal tax return (after establishing estimate), assuming the rates as noted above, the tax liabilities that should be set up are Federal and State, A, $180,000; $25,000 B.$177,600; $29,700 C. $165,500;$20,000 D. $171,000; $30,000arrow_forwardCongress would like to increase tax revenues by 5.5 percent. Assume that the average taxpayer in the United Staes earns $56,000 and pays an average tax rate of 20 percent. If the income effect is in effect for all taxpayers, what average tax rate will result in a 5.5 percent in tax revenues?arrow_forward
- The city of Lakeland levies a 2 percent tax on the value of all restaurant meals served to the public within the city limits. This year, the aggregate value subject to tax was $31.3 million, so current year revenue was $626,000. Lakeland plans to decrease the tax rate next year to 1.5 percent. Required: Compute next year’s restaurant tax revenue assuming next year’s tax base equals the current year base. Compute next year’s restaurant tax revenue assuming next year’s tax base increases to $40.9 million. Compute next year’s restaurant tax revenue assuming next year’s tax base increases to $45.9 million.arrow_forwardOfficials for the city of Winfield have agreed to forgo real estate taxes normally charged to Jamieson Corporation for the subsequent 10 years. In exchange, Jamieson has agreed to build a distribution facility that is expected to hire 500 new employees. What information must the city provide in its financial statements to inform taxpayers and other interested parties about the nature of this tax abatement?arrow_forwardCongress would like to increase tax revenues by 18 percent. Assume that the average taxpayer in the United States earns $53,000 and pays an average tax rate of 25 percent. a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 18 percent increase in tax revenues?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College