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(Best solution) A regressive tax is a tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners. \quad \$ 35 \text { per share) } & 136,500 \\ owned and managed by private corporations. Want to create or adapt books like this? Michael works for the Texas Department of Aging and Disability Services and needs to purchase new computers for the office. You earn $30,000 per year, and the federal tax rate is 10 percent. Would be good for an economics or math class. Use the companies' financial information to answer the following questions. What are the signs of low inflation? C. US tax obligations have taken a regressive turn (i.e., the burden has increased on the bottom while decreasing for the top) since 1980. That's because they spend a larger portion of their income on regressive taxes than people who earn more. is a Maryland State Registered Tax Preparer, State Certified NotaryPublic, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer. Incomestatementdata:AdvertisingexpenseCostofmerchandisesoldDeliveryexpenseDepreciationexpense-officebuildingsandequipmentDepreciationexpense-storebuildingsandequipmentDividendrevenueGainonsaleofinvestmentIncomefromLifecareCo.investmentIncometaxexpenseInterestexpenseInterestrevenueMiscellaneousadministrativeexpenseMiscellaneoussellingexpenseOfficerentexpenseOfficesalariesexpenseOfficesuppliesexpenseSalesSalescommissionsSalessalariesexpenseStoresuppliesexpense$125,0003,650,00029,00026,00095,0003,5752,22565,600128,50019,0001,8007,50013,75050,000165,00010,0005,145,000182,000365,00022,000, Retainedearningsandbalancesheetdata:Accountspayable$195,000Accountsreceivable543,000Accumulateddepreciationofficebuildingsandequipment1,580,000Accumulateddepreciation-storebuildingsandequipment4,126,000Allowancefordoubtfulaccounts8,150Available-for-saleinvestments(atcost)110,250Bondspayable,6%,due2022400,000Cash240,000Commonstock,$25par(400,000sharesauthorized;86,570sharesissued,82,670outstanding)2,164,250Dividends:Cashdividendsforcommonstock155,120Cashdividendsforpreferredstock85,000Stockdividendsforcommonstock62,800Goodwill510,000Incometaxpayable40,000Interestreceivable930InvestmentinLifecareCo.stock(equitymethod)689,100InvestmentinNordicWearInc.bonds(longterm)62,000Merchandiseinventory(December31,2012),atlowerofcost(FIFO)ormarket$780,000Officebuildingsandequipment4,320,000Paid-incapitalfromsaleoftreasurystock18,200Paid-incapitalinexcessofpar-commonstock842,000Paid-incapitalinexcessofpar-preferredstock150,000Preferred5%stock,$100par(30,000sharesauthorized;17,000sharesissued)1,700,000Premiumonbondspayable19,000Prepaidexpenses26,500Retainedearnings,January1,20128,708,150Storebuildingsandequipment12,560,000Treasurystock(3,900sharesofcommonstockatcostof$35pershare)136,500Unrealizedgain(loss)onavailable-for-saleinvestments(17,750)Valuationallowanceforavailable-for-saleinvestments(17,750)\begin{aligned} High-income earners use tax laws to their advantage to reduce their tax rates. Describe how tax incentives encourage global business. It is in opposition with a progressive tax, which takes a . Higher-income employees effectively pay a lower proportion of their overall pay into the Social Security system than lower-income employees because it's a flat rate for everyone and because of this cap. Where are most state lottery proceeds directed? The U.S. has a progressive tax system. Tariffsare excise taxes levied on imports. \text { Sales commissions } & 182,000 \\ As a result, lower-income people pay effectively the same rate as higher-income earners instead of lower ones. ", Tax Policy Center. Part of what makes the U.S. federal income tax progressive is the standard deduction that lets individuals avoid paying taxes on the first portion of the income they earn each year. PDF Sample Exam Questions/Chapter 7 - Oakland University 191.3 \div 14.7. f(t)=e0.14te0.11(15t)f(t)=e^{0.14t}e^{0.11(15-t)} User feesare regressive because they take a larger percentage of low incomes. Why do developing countries usually have less variety in their economic activities? b. Regressive taxes place a higher burden on wealthy taxpayers compared to people who earn less. "Contribution and Benefit Base. The amount of the standard deduction changes from year to year to keep pace with inflation. Taxes assessed under a progressive system are based on the taxable amount of an individual's income. c. An executive order Taxes on most consumer goods, sales, gas, and Social Security payroll are examples of regressive taxes. \text { Miscellaneous administrative expense } & 7,500 \\ With a regressive tax, the tax burden decreases as income rises. Thevalue-added tax (VAT)is a special type of excise tax not used in the U.S. The number of data points that illustrate the proper allocation of resources is . Direct tax Most relevant text from all around the . supply and demand. Which of the following statements best describes regressive taxes?, The Texas Constitution was amended in 2019 to prohibit which tax?, When Texas legislators are reluctant to raise taxes, how do they finance government services for the general public? This type of tax places more burden on low-income demographics rather than the high-income population. Look at the chart comparing the price of graphic T-shirts to the quantity supplied. The board of directors of MLS declared cash dividends of $50 million in 2021 after paying$20 million cash dividends in both 2020 and 2019. Which of these best describes the tax rates shown in the graph. This is apolitically acceptable wayto raise revenue without increasing tax rates. Customers will be charged$110 per hour for bulldozer work. Preferred5%stock,$100par(30,000sharesauthorized; Treasurystock(3,900sharesofcommonstockatcostof, Unrealizedgain(loss)onavailable-for-saleinvestments, Valuationallowanceforavailable-for-saleinvestments, Fundamentals of Engineering Economic Analysis, David Besanko, Mark Shanley, Scott Schaefer, Information Technology Project Management: Providing Measurable Organizational Value, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Isabelle Investigating God's World, ch. Many states also levy them on certain services. Regressive taxes place more burden on low-income earners. A tax that charges high-income earners a lower percentage than low-income earners. \text { Valuation allowance for available-for-sale investments } & (17,750)\\ It was very expensive to keep factories running. Regressive taxes have a greater impact on lower-income individuals than on the wealthy. It means you are having too much withheld, and you could instead earn interest on that money. What were the amounts of accumulated amortization reported by Coca-Cola and PepsiCo at the end of 2016 and 2017? \text { Investment in Nordic Wear Inc. bonds (long term) } & 62,000\\ The bulldozer is expected to operate for 1,500 hours per year for five years. \text { Service } \\ Low-income individuals pay a higher amount of taxes compared to high-income earners under a regressive tax system. to fund government programs. A tax bracket is a range of incomes subject to a certain income tax rate. The U.S. federal income tax is a progressive tax system. It proposes a substantive canon of construction imperium urbis 15 15. In a regressive tax system, as your income rises, the proportion of that income that you pay in tax declines. Which of the following terms best describes this tax? Either through an online search or a review of the index, answer the question. \end{array} owned by their members. The Institute on Taxation and Economic Policy found that the lowest-earning fifth paid 11.4% of their income in state and local taxes. Top 4 Examples of Regressive Tax Explained - WallStreetMojo Which detail is most likely to give consumers a false sense of security about using Edgozene? The correct answer is income tax is a direct tax. paid for. Sin tax critics argue that these disproportionately affect those who are less well off. What is the difference between inflation and deflation? rise until the supply falls. The federal gas tax was 18.4 cents per gallon, while the average state tax was 30.63 cents per gallon, as of July 2021. Regressive tax indirect tax direct tax proportional tax. Prepare a retained earnings statement for the year ended December 31, 2012. c. increasing spending. \hline \text { Advertising expense } & \$ 125,000 \\ A regressive tax system affects low-income taxpayers more than high-income taxpayers because it takes a higher percentage of their . Discover more about the flat tax system here. \text { D } & 230,000 & 10,000 & 10 & ? What would pay the least as a percentage of income under a regressive tax? A regressive tax affects people with low incomes more severely than people with high incomes because it is applied uniformly to all situations, regardless of the taxpayer. Questions and Answers for the Additional Medicare Tax, Worksheet Solutions Comparing Regressive, Progressive, and Proportional Taxes. Defined benefits superannuation doesn't have tax concessions Once a worker earns more than that amount, they don't have to pay any more Social Security tax for the year. Progressive taxation improves the poor's purchasing power and stimulates the economy. Income Tax vs. Capital Gains Tax: Differences, How the TCJA Tax Law Affects Your Personal Finances, Marginal Tax Rate System: Definition, How It Works and Rates. They also believe that businesses are likely to spend and invest more under a flat tax system, putting more dollars into the economy. Read the sample advertisement. "Questions and Answers for the Additional Medicare Tax.". On January 1, 2016, Valuation Allowance for Available-for-Sale Investments had a zero balance. \text { B } & \$ 40,000 & ? Regressive taxes include property taxes, sales taxes on goods, and excise taxes on consumables, such as gasoline or airfare. Which programs or projects are most likely funded by taxes paid by the citizens of the United States? A regressive tax is one thatimposes a harsher burden on lower-income households than on households with higher incomes. equal pay for owners and workers. A trade surplus is when a country exports more than it imports, while a trade deficit happens when imports exceed exports. In contrast, the other individual earns $320 per week, making her clothing sales tax 2.2% of income. ", Tax Policy Center. expansionary, contractionary, or proportional, Monetary Policy: The Federal Reserve Quiz, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. b. Proportional tax, also referred to as a flat tax, affects low-, middle-, and high-income earners relatively equally. That said, there is a limited tax credit available which is subject to income limits. View the full answer. to ensure surplus funds Which of These Best Describes Income Tax - Joseph-has-Leach d. reducing spending. "Caught Cheating: When Sin Taxes Forge Unforeseen Fallout. a tax for which the percentage of income paid in taxes decreases as income increases. \text { Income from Lifecare Co. investment } & 65,600 \\ a. \text { Method } \text { C } & 65,000 & 5,000 & ? \text { Office buildings and equipment } & 4,320,000 \\ Its opposite, a progressive tax, imposes a larger burden on the wealthy. Choice 2: 303030-year fixed rate mortgage at 3%3 \%3% with closing costs of $1500\$ 1500$1500 and 444 points, Sparkle is one of the many firms in the market for toothpaste, which is in long-run equilibrium. b. Which federal regulatory agency would most likely bring a civil suit against a business that broke securities laws? more money than an athletic trainer and will have an easier time finding a job. ", Gallup. The thresholds are different for married couples filing jointly. In contrast, the other individual earns $320 per week, making her clothing sales tax 2.2 percent of income. A regressive tax system levies the same percentage on products or goods purchased regardless of the buyer's income and is thought to be disproportionately difficult on low earners. ", Internal Revenue Service. But how much of an impact they have depends on the tax system used and how much you make. \text { Preferred 5\% stock, \$100 par (30,000 shares authorized; } & \\ The gas tax is also a Pigouvian tax (a tax on activities or items that can cause negative effects on others), with its own set of pros and cons. Regressive taxessales taxes, property taxes, and sin taxesand proportional taxes have a greater impact on low earners because they spend more of their income on taxation than other taxpayers. They may affect their standard of living but won't deprive them of living essentials. Check all that apply. What are some examples of regressive taxes? "Regressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, so that the average tax rate exceeds the marginal tax rate. But progressive taxesthe federal tax system used in the United Statesusually impact high-income earners more than anyone else. Finally, proportional taxes result in everyone paying the same portion of their income in a tax. \text { Accounts receivable } & 543,000 \\ Who has a regressive tax system? Explained by Sharing Culture ", Tax Foundation. This answer has been confirmed as correct and helpful. \text { Miscellaneous selling expense } & 13,750 \\ Employers are responsible for paying 6% of the first $7,000 of each employee's wages. AssetCostResidualValueServiceLife(Years)DepreciationMethodDepreciation(Year2)A?$20,0005DDB$24,000B$40,000?8SL4,500C65,0005,000? c. the earnings generated by the property. Paid by businesses or individuals on money they make. Econ: Unit 8 Flashcards | Quizlet This compensation may impact how and where listings appear. Determine the intensity x that gives the maximum \end{array} & \begin{array}{c} They take a higher percentage of income on the poor than on high-income earners. "Table 1101. c. They increase disposable income 12 percent on income between $10,275 and $41,775: $3,780 ($41,775 - $10,275 = $31,500 x 12 percent) +. owned by their employees. The term regressive tax means taxes that take a larger proportion of the income from lower earners than from higher earners. What is regressive tax? Definition and meaning A tax that takes a fixed percentage of income regardless of the taxpayer's level of income. Conclusion. What are Regressive, Proportional and Progressive Taxes? - Robinhood Any tax decreases their ability to afford these basics. The structural component of the budget outcome is affected by:A.Non-discretionary fiscal policy changes.B.Discretionary fiscal policy changes.C.The operation of automatic . Which Best Describes A Regressive Tax? (Best solution) - Law info The Tax Cuts and Jobs Act: What Did It Mean for You? "There is no rhyme or reason to it and it varies wildly from one county to another." Soloski suggested replacing the current property tax system with a county-based sales tax. Issued the stock certificates for the stock dividends declared in (h) and paid the cash dividends to the preferred stockholders. Letter to the UN Special Procedures on Abortion Rights in the US the SEC It waives tariffs on imports from countries with which it has free trade agreements. It exists because resources are scarce. "Are Federal Taxes Progressive? So the taxpayer has a marginal tax rate of 24 percent. At a certain level of income, withholding for Social Security is capped, but there is no cap on earnings for the Medicare tax, which is 1.45% of income. "2023 Social Security Changes. Although the United States has a progressive taxation system when it comes to income tax, meaning higher income earners pay a higher percentage of taxes each year compared to those with a lower income, we do pay certain levies that are considered to beregressive taxes. Taxes on most consumer goods, sales, gas, and Social Security payroll are examples of regressive taxes. "State Individual Income Tax Rates and Brackets for 2022.