MAT 1340 Midterm

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Arapahoe Community College *

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1340101

Subject

Economics

Date

Apr 29, 2024

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pdf

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7

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Midterm Assignment- For this assignment we will be looking at personal income taxes. In 2017 it was normal to be able to have “deductions” and a “personal exemption” deducted from one’s total income before determining their taxable income. For the purposes of this activity, we will consider only a “single” filing status. In 2017, the standard deduction was $6,350 and the personal exemption was $4,050. So, an individual who brought in a total income of $30,000 would have to pay taxes on $19,600 ($30,000-$6,350-$4050). The $19,600 represents their taxable income . Note: Taxable Income refers to income after accounting for the standard deduction and personal exemption. Total Income refers to income prior to the standard deduction and personal exemption. Grading: Category Details Points Part 1: Hypothetical Tax Code 1 5 questions, 3 points each. 15 Part 2: Hypothetical Tax Code 2 6 questions, 2.5 points each. 15 Part 3: House Tax Plan 5 questions, 3 points each. 15 Overall Submission Format, Presentation, Readability 5
TOTAL 50 Part 1: Hypothetical Tax Code 1 Consider a simplified version of the real tax code. Assume that the tax rate on all taxable income is 15% and the standard deduction ($6,350) and personal exemption ($4,050) still apply. 1. If your total income before exemptions was $35,000, what is your taxable income ? $24,600 2. How much would you have to pay in taxes on this income? $3690 3. What percentage of your total income would you pay in taxes? 10.5% 4. Write a function to model the total tax paid, T(x), with a total income of x dollars. T(x)= 0.15 (x- 10,400) T(x)=.15x -1560 5. How many different slopes are on this graph (below)? What do they represent? Below a graph that shows taxes paid as a function of total income for the total income between $0 and $60,000: T(x)= (0, 0 ≤ x ≤ 10,400) (.15x -1560, 10,400 ≤ x ≤ 60,000 ) I’m sorry I was not able to figure out how to make the function. There will be two slopes, From 0 -10,400: a flat slope From 10,400-60,000: a steep slope representing the 15% Part 2: Hypothetical Tax Code 2:
Now consider another hypothetical tax code. Assume the tax rate on the first $15,000 of taxable income is 10% and the tax rate on any additional income is 18%. The standard deduction ($6,350) and personal exemption ($4,050) still apply. In other words: • For taxable income from $0 to $15,000, you pay 10% of your taxable income in taxes, plus • For taxable income above $15,000, you pay 18% of your taxable income. 1. If your total income before exemptions were $10,000 how much would you pay in taxes? $1,000 2. If your total income were $20,000 how much would you pay in taxes? $2,400 3. If your total income were $50,000 how much would you pay in taxes? $7,800 4. Write a function to model the total tax paid, T(x), with a total income of x dollars. T(x)= .10(x-10400) T(x)= .18(x-10400) 5. Create a graph that shows taxes paid as a function of total income for the total income between $0 and $60,000.
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