tax problems – questin and answer ,.,. ch 1

(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 .irs.gov/”>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?