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| 1 | |
Taxes influence personal decisions such as whether to buy or rent a house. |
| | A) | True |
| | B) | False |
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| 2 | |
Jerry recently paid $20 in tolls for the Florida turnpike. The $20 payment is considered a tax. |
| | A) | True |
| | B) | False |
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| 3 | |
Taxes are voluntary payments paid to a government for a specific benefit received by the specific taxpayer. |
| | A) | True |
| | B) | False |
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| 4 | |
The federal income tax is an example of a regressive tax system. |
| | A) | True |
| | B) | False |
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| 5 | |
The marginal tax rate is often used in tax planning. |
| | A) | True |
| | B) | False |
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| 6 | |
The gift tax is imposed on the fair market value of items transferred upon death. |
| | A) | True |
| | B) | False |
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| 7 | |
The reduced pre-tax rate of return on municipal bonds is an example of an explicit tax. |
| | A) | True |
| | B) | False |
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| 8 | |
Horizontal equity means that two taxpayers with different amounts of income should pay different amounts of tax but fairly in relation to their ability to pay. |
| | A) | True |
| | B) | False |
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| 9 | |
Which of the following is considered a tax? |
| | A) | Fees to register an automobile |
| | B) | Speeding ticket |
| | C) | Entrance fee for a national museum |
| | D) | Local surcharge for a homeowner to connect to city sewer service |
| | E) | 1% local surcharge on hotel rooms to pay for city government |
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| 10 | |
Which of the following is an example of a progressive tax system? |
| | A) | Social security tax |
| | B) | A sales tax |
| | C) | A proportional tax |
| | D) | U.S. Federal Income Tax |
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| 11 | |
Mitch, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2013, how much federal tax will he owe? |
| | A) | $28,000 |
| | B) | $21,293.25 |
| | C) | $16,857.50 |
| | D) | $25,000 |
| | E) | None of the above |
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| 12 | |
Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2013, what is his average tax rate (rounded)? |
| | A) | 28.00% |
| | B) | 16.86% |
| | C) | 21.29% |
| | D) | 25.00% |
| | E) | None of the above |
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| 13 | |
Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. Using the U.S. tax rate schedule for year 2013, what is his effective tax rate (rounded)? |
| | A) | 15.00% |
| | B) | 15.33% |
| | C) | 21.62% |
| | D) | 19.36% |
| | E) | None of the above |
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| 14 | |
Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of Birmingham Bonds. If Marc earned an additional $80,000, what would his 2013 marginal tax rate be on the $80,000 (rounded)? |
| | A) | 28.00% |
| | B) | 26.26% |
| | C) | 32.48% |
| | D) | 25.00% |
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| 15 | |
James invests $100,000 in a city of Athens bond that pays 8% interest. Alternatively, James could have invested the $100,000 in a bond recently issued by HighTech, Inc. that pays 10% interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax rate is 25%. Which bond should James should choose and why? |
| | A) | The HighTech, Inc. bond because it earns a higher pre-tax rate of return |
| | B) | The HighTech, Inc. bond because it earns a higher after-tax rate of return |
| | C) | The city of Athens bond because it earns a higher pre-tax rate of return |
| | D) | The city of Athens bond because it earns a higher after-tax rate of return |
| | E) | James should be indifferent between the two bonds |
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