Question

Suppose the government imposes a tax of 10 percent on the first $20,000 of income, 20 percent on the next 40,000 of income and 30 percent on income above $60,000. For a person whose income is $90,000, the tax liability is _________ and the marginal tax rate is __________.
A. $27,000; 30 percent
B. $19,000; 20 percent
C. $19,000; 30 percent
D. $18,000; 20 percent
E. $ 9,000; 10 percent

Which of the following statements about lump-sum taxes is (are) correct?
(x) With a lump-sum tax, the marginal tax rate is always less than the average tax rate.
(y) With a lump-sum tax, the marginal tax rate is always equal to zero.
(z) Lump-sum taxes are frequently used to tax real property.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (z) only

According to the textbook, which of the following statements is (are) correct?
(x) Suppose the marginal tax rate is more than the average tax rate for all income above $25,000. The tax is progressive in this case.
(y) A regressive tax system occurs when higher-income taxpayers have lower tax rates, even though they pay a larger amount of tax, than lower-income taxpayers.
(z) Alfred paid a tax of $0.20 on the first dollar that he earned and he paid a tax of $0.20 on the last dollar he earned in 2011. Alfred is paying taxes in a tax structure that is consistent with a proportional or flat tax.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

Answer 1

ANSWER TO Q. NO. 1: OPTION C

ANSWER TO Q. NO. 2: OPTION B

ANSWER TO Q. NO. 3: OPTION A

DETAILS ARE AS BELOW:

Cie 30% of poom) = @qovo Ans 1:- (C) $19000 and 30% Ans: 1 :- Tas Liability lom. on foret 20010 = 2000 20% on noot 400DO = foro 30% abone foon 30006 - $19000 Marginal tox rate is the tax rate incurred on each additional dellar of income. It will rise as income dises. It is the age of tax applied to your income slab. So here Marginal tax rate is 30%. Answer is (c) Ama : 2 : (B) A lump sum tex is based on fixed amant , rather than on the real circumstances of taxed entity. So Marginal tox rate is always leis then everage tax rate end equal to cero. so (x) and (4) statements are correct.

Ans: 38 (A x,y and Z .. → A progressive tax is a tax in colich Querage tax rate increases as taxable amount increases. So, average tax is les than person's marginal tax rate. So (X) is correct. A regressive tox takes a large percentage of income from low-income on earners than from high-income earners. e. g. person Income Tax rate Tox. 1000 a 20% con 200 s Sow - 4% . 200 Ć loon 2% 200 So, (Y) is correct A flat tox system is where borne tax rate i used sugarles of income. Here Alfred paid sence tox on foret and last dollar earned. So (2) en is correct. no eller at soos