Question 1

A marginal tax rate is:

Accepted Answer

A marginal tax rate is the tax rate paid on a worker's next dollar of income. This means that if a worker earns an additional dollar of income, the marginal tax rate is the percentage of that dollar that will go towards taxes. Knowing your marginal tax rate is important because it affects decisions about earning extra income, investments, and deductions.

Question 2

Suppose you graduate with an accounting degree and then become a certified public accountant.You work for a big firm,but are offered a chance to prepare tax documents for your city government as an independent contractor.The city offers to pay you a consulting fee of $10,000.When deciding whether to accept the additional work,the most important tax factor in your decision is:

Accepted Answer

The marginal tax rate would be the most important tax factor in the decision, as it would determine the amount of tax owed on the additional income earned as an independent contractor. The marginal tax rate is the rate at which each additional dollar earned is taxed, and it takes into account all applicable tax brackets and deductions.

Question 3

Refer to the following table to answer the next seven questions:
 
-Using the table,what is the average tax rate for someone who makes $67,000 per year?

Accepted Answer

The answer of Refer to the following table to answer...

Question 4

Refer to the following table to answer the next seven questions:
 
-Using the table,what is the marginal income tax rate for someone who makes $67,000 per year?

Accepted Answer

The answer of Refer to the following table to answer...

Question 5

Refer to the following table to answer the next seven questions:
 
-Using the table,what is the total federal income tax bill for someone who makes $67,000 per year?

Accepted Answer

The answer of Refer to the following table to answer...

Question 6

Payroll taxes:

Accepted Answer

Payroll taxes are taxes that are withheld from an employee's paycheck by their employer and are used to fund mandatory spending programs such as Social Security and Medicare. They are not based solely on income and are not limited to a certain income level. Additionally, even self-employed individuals are typically responsible for paying payroll taxes on their own earnings.

Question 7

The most relevant tax rate for making decisions about earning additional income is the:

Accepted Answer

The marginal tax rate is the rate at which the last dollar earned is taxed. It is the most relevant tax rate when making decisions about earning additional income because it represents the tax impact of any additional income earned. Knowing your marginal tax rate allows you to calculate the net income you will receive after taxes on the additional income. This information can help you make informed decisions about whether earning additional income is worth the effort or if it would be subject to too much tax.

Question 8

Suppose you return to college and earn an MBA,after which you get an upper-management position with Yum! Brands.If the tax rates are the same as in 2012 and your starting salary is $125,000,how much will you owe in federal social insurance taxes?

Accepted Answer

The answer of Suppose you return to college and earn...

Question 9

If policymakers are concerned about the unequal distribution of income within society,then they should prefer a:

Accepted Answer

A progressive income tax system would be the best choice to address the unequal distribution of income within society. In a progressive system, those with higher incomes would pay a higher percentage of their income in taxes, which would redistribute wealth to those with lower incomes. This can help to reduce income inequality and promote economic fairness.

Question 10

Some people argue that social insurance taxes should be increased to remedy the fiscal problems faced by Social Security.What is a potential unintended consequence of this proposed solution?

Accepted Answer

The answer of Some people argue that social insurance taxes...

Question 11

Suppose you return to college and earn an MBA,after which you get an upper-management position with Yum! Brands.If your starting salary is $125,000,and the percentages are the same as they were in 2012,how much will you owe in Social Security taxes?

Accepted Answer

The answer of Suppose you return to college and earn...

Question 12

The United States has a:

Accepted Answer

The progressive income tax system means that those who earn higher incomes pay a higher percentage of their income in taxes compared to those who earn lower incomes. This is a more fair and equitable system as it helps redistribute wealth and reduces income inequality.

Question 13

Typically,the average tax rate for a person is ____________ their marginal tax rate,because ____________.

Accepted Answer

The average tax rate is typically below the marginal tax rate because the marginal tax rate applies only to the last dollars taxed, not to all income.

Question 14

A progressive income tax system is one in which:

Accepted Answer

A progressive income tax system is one in which tax rates increase as the level of income increases. This means that those with higher incomes are required to pay a greater proportion of their income in taxes than those with lower incomes. The rationale behind this system is that individuals with higher incomes have a greater ability to pay taxes and contribute to society.

Question 15

According to the U.S.Federal Tax Rates chart from the textbook (Figure 15.6),a person earning $100,000 in a given year is in the 28% tax bracket.How much will this individual owe in taxes for that year?

Accepted Answer

According to the tax bracket, the individual will owe 28% of their income which is $28,000. However, it is important to note that this is only on the amount over $89,350 as the lower income brackets have different rates. Therefore, the individual will owe less than $28,000 but more than $15,000. The exact amount will depend on their income in the lower tax brackets.

Question 16

Suppose you are offered a job with Amazon upon graduation.Your starting salary will be $70,000,which will put you in the 25% federal income tax bracket.The total amount of income taxes you pay is $13,530.Your average tax rate is approximately:

Accepted Answer

The answer of Suppose you are offered a job with...

Question 17

Suppose you are offered a $5,000 raise at work.Your current income tax rate is 25%.Your marginal income tax rate is 28%.Your average tax rate is 20%.The additional income tax you owe to the federal government (assuming you stay in the same rate bracket) if you accept the job will be:

Accepted Answer

The additional taxable income from the $5,000 raise is $5,000. Based on the marginal tax rate of 28%, the additional federal income tax owed would be $1,400 (28% of $5,000).

Question 18

The current tax rate for Social Security is:

Accepted Answer

The answer of The current tax rate for Social Security...

Question 19

Suppose you land a job with Google right out of college.Your economics training is very valuable to them,so you receive a starting annual salary of $65,000.What is the total amount of social insurance taxes you will be responsible for after your first year of work?

Accepted Answer

Social insurance taxes include Social Security and Medicare. The Social Security tax rate is 6.2% on income up to $160,200 (as of 2023), and the Medicare tax rate is 1.45% on all income. For a $65,000 salary, Social Security tax is $4,030 (6.2% of $65,000) and Medicare tax is $942.50 (1.45% of $65,000), totaling $4,972.50.

Question 20

Suppose you use your entrepreneurial spirit and economics training to start your own business.In your first year of work,you are able to earn $58,000 in gross income.What is the total amount of social insurance taxes you owe the federal government?

Accepted Answer

To calculate social insurance taxes, we need to use the FICA (Federal Insurance Contributions Act) tax rates set by the federal government. For the year 2021, the employee's share of the FICA tax is 7.65% of their gross income up to a cap of $142,800. Therefore, the calculation for the total amount of social insurance taxes owed is:

$58,000 x 7.65% = $4,437

However, this only calculates the Social Security tax portion of the FICA tax. There is also a Medicare tax that employees are required to contribute to, which is 1.45% of their entire gross income, with no income cap. So, the total FICA tax owed is:

$58,000 x 7.65% (Social Security) + $58,000 x 1.45% (Medicare) = $8,874

Therefore, the correct answer is C) $8,874.00

Quiz 15: Federal Budgets: the Tools of Fiscal Policy

A marginal tax rate is:

Refer to the following table to answer the next seven questions: -Using the table,what is the average tax rate for someone who makes $67,000 per year?

Refer to the following table to answer the next seven questions: -Using the table,what is the marginal income tax rate for someone who makes $67,000 per year?

Refer to the following table to answer the next seven questions: -Using the table,what is the total federal income tax bill for someone who makes $67,000 per year?

Payroll taxes:

The most relevant tax rate for making decisions about earning additional income is the:

Suppose you return to college and earn an MBA,after which you get an upper-management position with Yum! Brands.If the tax rates are the same as in 2012 and your starting salary is $125,000,how much will you owe in federal social insurance taxes?

If policymakers are concerned about the unequal distribution of income within society,then they should prefer a:

Some people argue that social insurance taxes should be increased to remedy the fiscal problems faced by Social Security.What is a potential unintended consequence of this proposed solution?

Suppose you return to college and earn an MBA,after which you get an upper-management position with Yum! Brands.If your starting salary is $125,000,and the percentages are the same as they were in 2012,how much will you owe in Social Security taxes?

The United States has a:

Typically,the average tax rate for a person is their marginal tax rate,because .

A progressive income tax system is one in which:

According to the U.S.Federal Tax Rates chart from the textbook (Figure 15.6) ,a person earning $100,000 in a given year is in the 28% tax bracket.How much will this individual owe in taxes for that year?

Suppose you are offered a job with Amazon upon graduation.Your starting salary will be $70,000,which will put you in the 25% federal income tax bracket.The total amount of income taxes you pay is $13,530.Your average tax rate is approximately:

Suppose you are offered a $5,000 raise at work.Your current income tax rate is 25%.Your marginal income tax rate is 28%.Your average tax rate is 20%.The additional income tax you owe to the federal government (assuming you stay in the same rate bracket) if you accept the job will be:

The current tax rate for Social Security is:

Suppose you land a job with Google right out of college.Your economics training is very valuable to them,so you receive a starting annual salary of $65,000.What is the total amount of social insurance taxes you will be responsible for after your first year of work?

Suppose you use your entrepreneurial spirit and economics training to start your own business.In your first year of work,you are able to earn $58,000 in gross income.What is the total amount of social insurance taxes you owe the federal government?