Question

During 2015, the Smiths and the Jones both filed joint tax returns. For the tax year ended December 31, 2015, the Smiths' taxable income was $118,000, and the Jones had total taxable income of $59,000 a. Using the federal tax rates given in Table 1.2, EEB or married couples filing joint returns, calculate the taxes for both the Smiths and the Jones b. Calculate and compare the ratio of the Smiths' to the Jones' taxable income and the ratio of the Smiths' to the Jones' taxes. What does this demonstrate about the federal income tax structure? a. Using the federal tax rates given in Table 1.2 for married couples filing joint returns, the taxes for the Smiths is (Round to the nearest dollar.) The taxes for the Jones is (Round to the nearest dollar.) b. The ratio of the Smiths' to the Jones' taxable income is(Round to two decimal places.) Data Table The ratio of the Smiths' to the Jones' taxes is(Round to two decimal places) What does this demonstrate about the federal income tax structure? (Choose the best answer below.) TABLE 1.2: Tax Rates and Income Brackets for Joint Returns (2015) Taxable Income Joint Returns 50 to $18,150 $18,151 to $73,800 73,801 to $148,850 $148,851 to $226,850 $226,851 to $405,100 S405,101 to $457,600 Over $457,600 O A. Those who earn higher incomes pay a higher proportion of their income in taxes. O B. Those who earn lower incomes pay a higher proportion of their income in taxes. ° C. Those who earn higher incomes pay a lower proportion of their income in taxes Tax Rates 10% 15% 25% 28% 33% 35% 39,6% D. Everyone pays the same proportion of their income in taxes. Click on the icon located on the top-right corner of the data table above in order to copy its contents into a spreadsheet.) Print Done Click to select your answer(s)

Answer 1

	Given,
	Smiths Taxable income	$118,000
	Jones Taxable income	$59,000
a	For smiths,
	Tax calculation
	18150 x 10%	1,815.00
	(73800-18150) x 15%	8,347.50
	(118000-73800) x 25%	11,050.00
	Total Tax	$ 21,212.50
	For Jones,
	Tax calculation
	18150 x 10%	1,815.00
	(59000-18150) x 15%	6127.5
	Total Tax	$    7,942.50
b	Ratio of smiths to jones,
	Taxable income	2.00	(118000/59000)
	Taxes	2.67	(21212.50/7942.50)
c	a) Those who earns higher income pay a higher proportion of their income in taxes.