Indicate how each of the following could impact tax evasion and explain why the effect takes place: a. An increase in MTRs. b. A decrease in MTRs. c. An increase in the complexity of the tax code. d. An increase in the probability that a taxpayer’s return will be audited. e. An increase in the penalty for tax evasion.
An increase in marginal tax rates increases the incentives for tax evasion and this effect take place due to increase in the marginal benefit of tax evasion and downward shifting of marginal benefit curve.
A decrease in marginal tax rates decreases the incentive for tax evasion and this effect take place due to decrease in the marginal benefit of tax evasion and upward shifting of marginal benefit curve.
If there is an increase in the complexity of the tax code then it becomes more difficult for the authorities to determine if the evasion is taking place. This results in decrease in the marginal cost of tax evasion by decreasing the probability that the evasion will be detected.
An increase in the probability that a taxpayer’s return will be audited decreases the chances of tax evasion by increasing its marginal cost which results in increase in the probability of the audit of taxpayer’s return.
e. An increase in the penalty for tax evasion.
An increase in the penalty for tax evasion increases its marginal cost which in turn decreases the amount of evasion.
Indicate how each of the following could impact tax evasion and explain why the effect takes...
Indicate how each of the following could impact tax evasion and explain why the effect takes place: a. An increase in MTRs b. A decrease in MTRs. c. An increase in the complexity of the tax code. d. An increase in the probability that a taxpayer's return will be audited. e. An increase in the penalty for tax evasion.
The president of Blossom Company asks if you could indicate the impact certain transactions have on the following ratios. Complete the table, indicating whether each transaction will increase, decrease, or have no effect on the specific ratios provided for Blossom Company. Current Ratio Accounts Receivable Turnover (10x) Average Collection Period (36.5 days) Transaction 1. Received $6,000 on cash sale. The cost of the goods sold was $3,120 Decrease No effect No effect 2. Recorded bad debt expense of $600 using...
Could you explain each step very clearly like A=L+OE system Question 6 View Policies Show Attempt History Your Answer Correct Answer - Your answer is partially correct. Indicate whether each of the following transactions would increase, decrease, or have no effect on total assets, total liabilities, total shareholders' equity, and the number of shares: Shareholders' Equity Number of Shares Transaction Assets Liabilities (a) Declared a cash dividend. No Effect Increase Decrease No Effect (b) Paid the cash dividend declared in...
1. For each of the following events, *explain with specificity, WHY (the reason) *and state HOW (increase, decrease or no effect) the event described affects long-run aggregate supply of the United States. The United States experiences a wave of immigration. (why and how) Scientists develop highly sophisticated and reliable robots equipped with Artificial Intelligence. (why and how) (b)
The president of Metlock, Inc. asks if you could indicate the impact certain transactions have on the following ratios. Complete the table, indicating whether each transaction will increase, decrease, or have no effect on the specific ratios provided for Metlock, Inc.. Average Collecti Transaction Current Ratio (2:1) Accounts Receivable Turnover (10X) (36.5 day Received $6,200 on cash sale. The cost of the goods sold was $3,224 Recorded bad debt expense of $620 using allowance method. Wrote off a $124 account...
Indicate whether each of the following would be increased or decreased in liver in response to an increase in [cAMP]. Briefly explain why each increase or decrease makes metabolic sense. A. activity of PFK-1 B. activity of FBPase-1 C. activity of glycogen synthase D. activity of phosphorylase kinase E. concentration of β-D-fructose-2,6-bisphosphate
Problem 5-28 (LO. 1, 2) In each of the following independent situations, indicate the effect on taxable income and E & P, stating the amount of any increase (or decrease) in each as a result of the transaction. Assume that E & P has already been increased by taxable income. Enter a decrease as a negative number by using the minus sign. If there is no effect, enter "o". Taxable Income Increase (Decrease) E & P Increase (Decrease) Transaction C....
6.3 Explain the effect that each of the following fiscal policy measures could have on aggregate supply a. The reduction of taxes on capital gains b. Reducing the higher marginal individual income tax rates to the same level as the company income tax rate C. Increasing the marginal income tax rates paid by individuals.
Part A: True/False/Uncertain Questions Indicate whether each of the following statements is true, false or uncertain and explain why. Most of the marks depend on the quality of the explanation - unsupported answers will receive little or no marks. Each question is worth 5 marks for a total of 20 marks. (1) An increase in the tax rate has the same effect on the aggregate expenditure function as a decrease in government spending.
1-21 Understanding Tax Rate Concepts. Indicate whether the following statements are true r false and, if false, explain why a. b. c. Tax-exempt income would cause the taxpayer's average tax rate to increase. Tax-exempt income would cause the taxpayer's marginal tax rate to decrease Tax-exempt income would cause the taxpayer's effective tax rate to decrease