Question 1

The United States has a:

Accepted Answer

The United States has a progressive income tax system, meaning that as income increases, the tax rate also increases. This is widely considered to be a fair system as it places a greater responsibility for funding public services on those with higher incomes.

Question 2

A marginal tax rate is:

Accepted Answer

A marginal tax rate is the tax rate paid on a worker's next dollar of income. It is important for individuals to be aware of their marginal tax rate when making decisions about earning extra income or pursuing different job opportunities.

Question 3

Refer to the following table to answer the next  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 4

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

Accepted Answer

The marginal tax rate is the tax rate that applies to the last increment of a taxpayer's income. It is the most relevant tax rate for making decisions about earning additional income because it helps to determine how much of the additional income will be taxed. By understanding the marginal tax rate, a taxpayer can assess whether the additional income is worth the effort, as it may be taxed at a high rate, reducing the net income gained. The income tax rate and average tax rate are important in calculating the total amount of tax owed, but they do not provide the same insight into the cost-benefit analysis of earning additional income as the marginal tax rate. Sales tax and property tax rates are relevant for different purposes and are not applicable in this context.

Question 5

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 6

Refer to the following table to answer the next  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 7

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

The answer of Suppose you land a job with Google...

Question 8

The current tax rate for Social Security is:

Accepted Answer

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

Question 9

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 federal social insurance tax rate for 2012 was 6.2%, which applies to the first $113,700 of earnings. Therefore, your total social insurance tax for the year would be $7,350 ($113,700 x 0.062) assuming you have no other earnings. This amount would be withheld from your paychecks throughout the year. However, since your starting salary is $125,000, you will owe an additional 1.45% on your earnings above $113,700, which is $11,300 ($125,000 - $113,700). Therefore, your total social insurance tax for the year would be $8,443 ($7,350 + $1,093), which is more than $8,400 but less than $8,800. So the answer is B.

Question 10

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

Accepted Answer

The answer of Typically, the average tax rate for a...

Question 11

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 income is $5,000, so the tax on this amount at the marginal rate of 28% will be $1,400. This is the amount of additional federal tax owed if the individual accepts the job offer.

Question 12

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

The answer of Suppose you use your entrepreneurial spirit and...

Question 13

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 14

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 15

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 16

A progressive income tax system is one in which:

Accepted Answer

A progressive income tax system is one in which income tax rates increase as earned income increases. This means that those who earn more money pay a higher percentage of their income in taxes, while those who earn less money pay a lower percentage of their income in taxes. This system is designed to be more fair, as it places a greater burden on those who are better able to afford it.

Question 17

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

Accepted Answer

A progressive income tax system is designed to tax those with higher incomes at higher rates, which can help reduce income inequality by transferring wealth from the highest earners to those with lower incomes.

Question 18

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 19

Refer to the following table to answer the next  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 20

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 most important tax factor in this decision is the marginal tax rate, as accepting additional income could push the taxpayer into a higher tax bracket and result in a higher tax rate being applied to all of their income. The gross amount of the payment, the taxpayer's current tax bracket, and their new average tax rate are all important considerations as well, but they are not as crucial in this particular decision. The political party controlling the city government is not relevant to the tax implications of the decision.

Quiz 15: Federal Budgets: the Tools of Fiscal Policy

The United States has a:

A marginal tax rate is:

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

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

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?

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

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?

The current tax rate for Social Security is:

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?

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

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:

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?

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?

Payroll taxes:

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:

A progressive income tax system is one in which:

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?

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