Short qusetions? 1. Explain the four questions of public finance.2. Subnational governments collect only part of total tax revenues and spend more thanthey receive from their taxpayers. How is it possible and what does it imply for localfinance?3. Suppose your town wishes to build a dam to protect itself from the risk of flooding.Despite the fact that each family in the town is willing and able to pay up to $200 tohave the dam built and it will cost only $150 per family, a voluntary contributioncampaign is unable to raise enough funds to build the dam. Why? What type of problemis this, and what solution would you recommend?4. Does taxing the wealthy to give benefits to the poor increase social welfare? Explain.

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Answered: 1. Explain the four questions of public…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter1: Introductin To Taxation

Section: Chapter Questions

Problem 12P

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The municipality of Smallville has arranged to borrow $30 million in order to implement several public projects (flood control, school security, etc.). The interest rate will be 3% per year, payable at the end of each year. This $30 million debt will be retired by making payments of $5 million at the end of each year. The Board of Supervisors is concerned that it will take too long to pay off this debt. How many years will it take to retire this $30 million debt and its associated interest payments?
More than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $60,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 3.75% or corporate bonds yielding 5% in taxable interest income. (a) What is the annual interest income (in $) and tax status of the municipal bond investment? $ solved (b) What is the annual interest income (in $) and tax status of the corporate bond investment? $ solved (c) If you are in the 30% marginal tax bracket for federal income taxes and your state and local taxes on that income…
More than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $60,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 2.75% or corporate bonds yielding 4% in taxable interest income. (a) What is the annual interest income (in $) and tax status of the municipal bond investment? $ (b) What is the annual interest income (in $) and tax status of the corporate bond investment? $ (c) If you are in the 32% marginal tax bracket for federal income taxes and your state and local taxes on that income amount to an…
More than 50,000 state and local governments and their agencies borrow money by issuing municipal bonds to build, repair, or improve schools, streets, highways, hospitals, sewer systems, and so on. When the federal income tax law was adopted in 1913, interest on municipal bonds was excluded from federal taxation. As a result, municipal bond investors are willing to accept lower yields than those they can obtain from taxable bonds. As part of your portfolio, you are considering investing $60,000 in bonds. You have the choice of investing in tax-exempt municipal bonds yielding 3.75% or corporate bonds yielding 5% in taxable interest income. (a)What is the annual interest income (in $) and tax status of the municipal bond investment? $ ---Select--- tax-free taxable (b)What is the annual interest income (in $) and tax status of the corporate bond investment? $ ---Select--- tax-free taxable (c)If you are in the 28% marginal tax bracket for federal income taxes and your state…
Traverse County needs a new county government building that would cost $10 million. The politicians feel that voters will not approve a municipal bond issue to fund the building since it would increase taxes. They opt to have a state bank issue $10 million of tax-exempt securities to pay for the building construction. The county then will make yearly lease payments (of principal and interest) to repay the obligation. Unlike conventional municipal bonds, the lease payments are not binding obligations on the county and, therefore, require no voter approval. Required 1. Do you think the actions of the politicians and the bankers in this situation are ethical? 2. In terms of risk, how do the tax-exempt securities used to pay for the building compare to a conventional municipal bond issued by Traverse County?
Property taxes are the "cash cow" for many governmental entities. However, not all property taxes are collected. This week in your discussion post I want you to provide two Items: The journal entry to write off uncollectible delinquent taxes How could a government attempt to reduce their uncollectible taxes?
You are the owner of Cache, a chain of women’s clothing boutiques. Your state has a sales tax of 5% and your city has an additional sales tax of 1.5%. Each quarter you’re responsible for making these tax deposits to the city and state. Last quarter your stores had total revenue including sales tax of $266,250. A- how much revenue was sales in dollars, and how much is sales tax in dollars? B-how much sales tax in dollar should be sent to the city? C- how much sales tax and dollars should be sent to the state?
According to a professional analysis of one proposed federal tax cut (by the accounting firm Deloitte and Touche), the cut would have resulted in the following income tax savings: a single person with a household income of $41,000 would save $211 in taxes; a single person with a household income of $530,000 would save $12,838 in taxes; a married couple with two children and a household income of $41,000 would save $1208 in taxes; and a married couple with two children and a household income of $530,000 would save $13,442 in taxes. Find the absolute difference in savings between a single person earning $41,000 and a single person earning $530,000. Then express the savings as a percentage of earnings for each person. Find the absolute difference in savings between a married couple with two children earning $41,000 and a married couple with two children earning $530,000. Then express the savings as a percentage of earnings for each couple. Write a paragraph either defending or…
Assume no Washington income tax, and Washington has a $4M grant to spend. Zoe Wu tells the mayor that a means-tested program would allow the poor to get more money. She suggests that benefits should be redunced by $10 for each $100 in workers’ pre-tax income. Suppose the guarantee rate is G. How much benefit would each group get at their original income (working 40 weeks) in terms of G? 2 2. With the $4M grant, how large can G be? How much benefit does each group get? What is the maximum income in the phase-out region? Draw the benefit schedule with labels. Suppose the government could identify workers’ type and sent them money equal to your answer in part (b), regardless of their labor supply choice. (a) What is the percentage change in workers’ wealth, the dollar value of their time plus unearned income? (b) How many weeks per year would each type work using the elasticity of η = −0.1? Compare your answer to 4(d). Explain why they are similar or different. C)…
You are the owner of Caché, a chain of women's clothing boutiques. Your state has a sales tax of 7%, and your city has an additional sales tax of 1.5%. Each quarter you are responsible for making these tax deposits to the city and state. Last quarter your stores had total revenue, including sales tax, of $705,250. (a)How much of this revenue was sales (in $) and how much was sales tax (in $)? (b)How much sales tax (in $) should be sent to the city? (c)How much sales tax (in $) should be sent to the state?
NEED BOTH QUESTIONS. .... As the tax assessor for Indian Creek County, you have been informed that due to budgetary demands, a tax increase will be necessary next year. The total market value of the property in the county is $900,000,000. Currently, the assessment rate is 35% and the tax rate is 30 mills. The county commission increases the assessment rate to 45% and the tax rate to 35 mills. (a)How much property tax (in $) was collected under the old rates? (b)How much more tax (in $) revenue will be collected under the new rates?
Your employer asks you to consult on the better approach to a decision. What should the corporation pay for an asset that will return them $150,000 at the end of year 1, then zero in year 2, then $400,000 in years 3 & 4, then zero in year 5, then $200,000 in years 6-10, assuming their discount rate is 3% (ignoring taxes) ?

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