Origami does business in states X and Y.State X uses an equally-weighted three-factor apportionment formula and has a 4 percent state tax rate.State Y uses an apportionment formula that double-weights the sales factor and has a 6 percent tax rate.Origami's taxable income,before apportionment,is $3 million.Its sales,payroll,and property information are as follows.
a.Calculate Origami's apportionment factors,income apportioned to each state,and state tax liability.
b.State Y is considering changing its apportionment formula to a single sales factor.Given its current level of activity,would such a change increase or decrease Origami's state income tax burden? Provide calculations to support your conclusion.

Question

Origami does business in states X and Y.State X uses an equally-weighted three-factor apportionment formula and has a 4 percent state tax rate.State Y uses an apportionment formula that double-weights the sales factor and has a 6 percent tax rate.Origami's taxable income,before apportionment,is $3 million.Its sales,payroll,and property information are as follows.
  a.Calculate Origami's apportionment factors,income apportioned to each state,and state tax liability.
b.State Y is considering changing its apportionment formula to a single sales factor.Given its current level of activity,would such a change increase or decrease Origami's state income tax burden? Provide calculations to support your conclusion.

Quizplus · Accepted Answer

The Answer of Origami does business in states X and Y.State X uses an equally-weighted three-factor apportionment formula and has a 4 percent state tax rate.State Y uses an apportionment formula that double-weights the sales factor and has a 6 percent tax rate.Origami's taxable income,before apportionment,is $3 million.Its sales,payroll,and property information are as follows.
  a.Calculate Origami's apportionment factors,income apportioned to each state,and state tax liability.
b.State Y is considering changing its apportionment formula to a single sales factor.Given its current level of activity,would such a change increase or decrease Origami's state income tax burden? Provide calculations to support your conclusion.

Origami Does Business in States X and Y