EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 18, Problem 3RQ
To determine
Which among the options is an example of regressive taxation .
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2)
In 2015, a country's progressive income tax rates were 15% on the first $25,000,
18% on the next $35,000, 20% on the next $45,000, and 25% on any additional income. If your
gross taxable earnings for the year were $150,000, calculate the total income tax that you paid.
Suppose in Fiscal illegal there is a 0 percent tax on the first 10,000 of income, but there is a 20% tax on earnings between $10,000 and $20,000 and a 30% tax on income $20,000 and $30,000. Any income above $30,000 is taxed at 40%.
If your income is $70,000, how much will you pay in taxes?
Determine your average tax rate?
Suppose in Fiscalville there is no tax on the first $10,000 of income, but a 20 percent tax on earnings between $10,001 and $20,000 and a 30 percent tax on income between $20,001 and $30,000. Any income above $30,000 is taxed at 40 percent. If your income is $50,000, how much will you pay in taxes
Chapter 18 Solutions
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- Ray earns an income of $250,000 per year in Country X. Suppose for the year 2014 there is a proportional tax rate of 22%. Also suppose for the year 2015 that the country follows the federal income tax bracket, as shown below. What will be the change in the direction and the amount of income tax paid by Ray? Taxable income between $0 and $9,225 $9,226 and $37,450 $37,451 and $90,750 $90,751 and $189,300 $189,301 and $411,500 Federal income tax bracket 10 percent 15 percent 25 percent 28 percent 33 percent $411,501 and $413,200 35 percent There will be $413,201 and above 39.6 percent ▾ in the income tax paid by Ray in the year 2015 as compared to the year 2014 by $ (Round your answer to two decimal places.)arrow_forwardRefer to the tax table below. If your taxable income is $8,000, your average and marginal tax rates are Taxable Income Total Tax $ 2,000 $ 200 4,000 600 6,000 1,200 8,000 2,000 10,500 3,000 25% average rate and 25% marginal rate on additional income. 25% average rate and 40% marginal rate on additional income. 20% average rate and 30% marginal rate on additional income. 25% average rate with a marginal rate that can not be determined.arrow_forwardUse the below table to calculate the amount of federal income tax that Kristen should report if she earned a taxable income of $87,011 in 2017? Federal Tax Rates for 2017 15% on the first $44,784 of taxable income, plus 19% on the next $45,594 of taxable income, plus 26.5% on the next $50,628 of taxable income, plus 32% on any further taxable income Income tax = $ hsarrow_forward
- Suppose there is a bill to increase the tax on cigarettes by $1 per pack coupled with an income tax cut of $500. Suppose a person smokes an average of 500 packs of cigarettes per year—and would thus face a tax increase of about $500 per year from the cigarette tax at the person’s current level of consumption. The income tax measure would increase the person’s after-tax income by $500. Would the combined measures be likely to have any effect on the person’s consumption of cigarettes? Why or why not?arrow_forward5) Applying the following hypothetical Federal Income Tax Rate Table, for a Single Tax-Filer earning $100,000 annually, calculate the following (Show your Calculations): a) Total Tax Due?b) Marginal Tax Rate? c) Effective Tax Rate? Tax Rate 10% 15% 25% 30% 35% Single Tax Filer Up to $10,000 $10,000 - $40,000 $40,000 – $85,000 $85,000 – $150,000 $150,000 - $400,000arrow_forwardThe country of Aquilonia has a tax system identical to that of Canada. Suppose an Aquilonian bought a parcel of land for $10,000 in 1960 when the price index equalled 100. In 2019, the person sold the land for $100,000, and the price index equalled 500. If the person must pay 20 percent of any capital gain in taxes, what is the after-tax real capital gain (in 2019 dollars) on the land? $72,000 $32,000 O $6400 O $62,000arrow_forward
- Suppose that Darnell is preparing to file his taxes. He is single and currently lives in San Diego. Darnell earned $60,000 in taxable income in 2022. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. On Annual Taxable Income... Up to $10,275 From $10,275 to $41,775 From $41,775 to $89,075 From $89,075 to $170,050 From $170,050 to $215,950 From $215,950 to $539,900 Over $539,900 The Tax Rate Is... (Percent) 10.0 Darnell calculates that he owes 12.0 22.0 24.0 32.0 35.0 37.0 Based on the IRS table, Darnell calculates that his marginal tax rate is in income taxes for 2022. Darnell then calculates that his average tax rate is when his annual taxable income is $60,000. based on the annual income level and the amount of taxes he owes for 2022.arrow_forward2. For 2021, the wage base limit for Social Security taxes increased to $142,800, meaning that wage/salary income above $142,800 is not taxed for Social Security. That means up to $8,853 can be withheld from your paycheck for Social Security taxes for the year, but not more, regardless of how much you earn. The payroll tax for the Social Security program is 12.4%. One reform idea is to remove the wage base limit so all wage/salary income is subject to the 12.4% payroll tax for Social Security. a. Now that you have some expertise in public finance, please provide policy advice on this reform proposal. Describe the benefits and drawbacks of adopting this proposal. b. What are the implications for behaviors, such as employment, work hours, retirement decisions, etc.? c. Draw a graph to describe the reform and a behavioral change. Explain it.arrow_forwardSuppose that the for every 10% increase in the price of gasoline, consumers will decrease the quantity demanded by 1%, and suppliers will increase their supply of gasoline by 9%. Next, suppose that there is a $0.50 per gallon tax on gasoline, and after the tax quantity exchanged in the market is 15 billion gallons of gasoline. Given this information, what is the total government revenue from the tax? What is the consumer and producer tax incidence (how much of the tax revenue would have come from consumers, and how much from suppliers)? Search entries or author Reply. Unread ↓ 5 5 Replies are only visible to those who have posted at least one reply.arrow_forward
- Consider the following hypothetical income tax brackets for a married couple. Assume for simplicity there are no exemptions or deductions. Income $0-$20,000 $20,000-$50,000 $50,000-$100,000 Over $100,000 Tax Rate 10% 20 45 50 Suppose the couple's income is $70,000. What is the couple's marginal tax rate? The couple's marginal tax rate is 45 percent. (Enter your response as an integer.) What is their average tax rate? The couple's average tax rate is percent. (Enter your response as a real number rounded to one decimal place.)arrow_forwardTo raise revenues during the recent recession, the governor of your state proposed the following taxation formula. T() = 0.001/0.5, where i represents total annual income earned by an individual in dollars and T(i) is the income tax rate as a fraction of total annual income. (Thus, for example, an income of $50,000 per year would be taxed at about 22%, while an income of double that amount would be taxed at about 32%.)t (a) Calculate the after-tax (net) income N(i) an individual can expect to earn as a function of income i. N(i) = (b) Calculate an individual's marginal after-tax income at income levels of $300,000 and $500,000. (Round your answer to four decimal places.) N'(300,000) = $ per dollar income N'(500,000) = $ X per dollar income (c) At what income does an individual's marginal after-tax income become negative? (Round your answer to two decimal places.) $ What is the after-tax income at that level? (Round your answer to two decimal places.) $4 What happens at higher income…arrow_forward18_Which of the following is an example of a direct tax? Check all that apply. A tax placed directly on alcohol to discourage people from drinking A tax placed directly on cigarettes to encourage people to stop smoking Income tax A poll or head tax that charges everyone the same euro amount Which of the following choices represent excise taxes? Check all that apply. A tax of an absolute sum levied on every person or every household The 20% value added tax on a €60,000 Porsche A tax levied on business profits Social Security taxes The 60 pence per-litre unit tax on petrol purchased at a pump in the UK True or false: Any form of an excise tax is a regressive tax. False Truearrow_forward
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