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##### tax problems - questin and answer,.,. ch 1

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solution

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Question;(1);[LO3] 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?;(2);[LO3] Using the facts in the;previous problem, what minimum tax would need to be assessed on Shameika to;make the tax progressive with respect to effective tax rates?;(3);[LO3, LO5] 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). 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? What effect will;this tax rate change have on the tax base and tax collected?;[LO3, LO5] Using the facts from the previous problem, 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 earns only $75,000;in taxable income? What is the term that;describes this type of reaction to a tax rate increase? What types of taxpayers are likely to respond;in this manner?;(4);[LO5] Given the following tax structure, what;tax would need to be assessed on Venita to make the tax horizontally equitable?;(5);[LO5] Using the facts in the;previous problem, what is the minimum tax that Pedro should pay to make the tax;structure vertically equitable based on the tax rate paid? This would result in what type of tax rate;structure?;(6);[LO5] Using the facts in the;previous problem, what is the minimum tax that Pedro should pay to make the tax;structure vertically equitable with respect to the amount of tax paid? This would result in what type of tax rate;structure?;(7);[LO5] Consider the following tax rate;structure. Is it horizontally;equitable? Why or why not? Is it vertically equitable? Why or why not?;[LO5] Consider the following tax rate;structure. Is it horizontally;equitable? Why or why not? Is it vertically equitable? Why or why not?;(8);[LO5] Consider the following;tax rate structure. Is it horizontally;equitable? Why or why not? Is it vertically equitable? Why or why not?;(9);[LO1, LO4 PLANNING] Lorenzo is;considering starting a trucking company either in Texas or Oklahoma. He will relocate his family, which includes;his wife, children, and parents, to reside in the same state as his;business. What types of taxes may;influence his decision of where to locate his business?;(10);[LO3, LO5 PLANNING] 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. If the income effect is in effect for all;taxpayers, what average tax rate will result in a 10 percent increase in tax;revenues? This is an example of what;type of forecasting?;(11);[LO5 RESEARCH] Locate the IRS Web;site at http://www.irs.gov/. For every $100 the IRS collected, how much;was spent on the IRS collection efforts?;What tax system criterion does this information help you to evaluate;with respect to the current U.S. tax system?;(12);[LO4 RESEARCH] Using the Internet;find a comparison of income tax rates across states. What state currently has the highest income;tax rate? In considering individual tax;burdens across states, what other taxes should you consider?

Paper#38132 | Written in 18-Jul-2015

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