Question

14. Given the following tax structure, what minimum tax would need to be assessed on Shameika to make the tax progressive with respect to average tax rates? Taxpayer Salary Muni-Bond Interest Total Tax Mihwah $ 10,000 $ 10,000 $ 600 Shameika $ 50,000 $ 30,000 ???

15. Given the following tax structure, what minimum tax would need to be assessed on Shameika to make the tax progressive with respect to effective tax rates? (Round your final answer to nearest whole dollar amount.) Taxpayer Salary Muni-Bond Interest Total Tax Mihwah $ 10,000 $ 10,000 $ 600 Shameika $ 50,000 $ 30,000 ???

16. Song earns $100,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $20,000 of tax). a. If Congress increases the income tax rate such that Song’s average tax rate increases from 20 percent to 25 percent, how much more income tax will she pay assuming that the income effect is descriptive? (Round your intermediate calculations and final answer to 2 decimal places.) b. If the income effect is descriptive, the tax base and the tax collected will increase. TRUE/FALSE

17. Song earns $100,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $20,000 of tax). Answer the questions below assuming that Congress increases the income tax rate such that Song's average tax rate increases from 20 percent to 25 percent. a. What will happen to the government’s tax revenues if Song chooses to spend more time pursuing her other passions besides work in response to the tax rate change and therefore earns only $75,000 in taxable income? Government's tax revenues would decrease by $1,250 Government's tax revenues would increase by $1,250 Government's tax revenues would decrease by $1,500 Government's tax revenues would increase by $1,500 Government's tax revenues would remain unchanged b. What is the term that describes this type of reaction to a tax rate increase? Endowment effect Price effect Budget constraint Substitution effect Income effect c. What types of taxpayers are likely to respond in this manner? Taxpayers with less disposable income Taxpayers with more disposable income Given the following tax structure, Taxpayer Salary Total Tax Mae $ 10,000 $ 600 Pedro $ 20,000 $ 1,500 Venita $ 10,000 ??? What tax would need to be assessed on Venita to make the tax horizontally equitable? Given the following tax structure, Taxpayer Salary Total Tax Mae $ 10,000 $ 600 Pedro $ 20,000 ??? a. What is the minimum tax that Pedro should pay to make the tax structure vertically equitable based on the tax rate paid? (Round your final answer to nearest whole dollar amount.) b. This would result in what type of tax rate structure? Given the following tax structure, Taxpayer Salary Total Tax Mae $ 10,000 $ 600 Pedro $ 20,000 ??? a. What is the minimum tax that Pedro should pay to make the tax structure vertically equitable with respect to the amount of tax paid? b. This would result in what type of tax rate structure?

18. Congress would like to increase tax revenues by 10 percent. Assume that the average taxpayer in the United States earns $65,000 and pays an average tax rate of 15 percent. a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 10 percent increase in tax revenues? (Round your answer to 2 decimal places.) b. This is an example of what type of forecasting? (choose: STATIC/DYNAMIC)

Answer 1

Question No. (14)

Answer -

Step - (1) - Information Given -

Taxpayer	Salary ($)	Muni-Bond Interest	Total Tax ($)
Mihwah	10000	10000	600
Shameika	50000	30000	?

.

Step - (2) - Calculation of Minimum Tax -

Particulars	Explanation
Mihwah’s average tax rate	Total tax / taxable income = $600 / $10000	6%
. Minimum Tax	A 6 percent average tax rate on Shameika’s $50000 taxable income = $50000 * 6%	. $3000