AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 01-05 Apply appropriate criteria to evaluate alternate tax systems. Level of Difficulty: 3 Hard 109. Given the following tax structure, what amount of tax would need to be assessed on Carrie to make the tax horizontally equitable? What is the minimum tax that Simon should pay to make the tax structure vertically equitable based on Fantasia's tax rate? This would result in what type of tax rate structure? Horizontal equity means that two taxpayers in similar situations pay the same tax. Thus, to make the tax structure horizontally equitable, Carrie should pay $1,500 in tax. Fantasia's average tax rate is 7.5%. To be vertically equitable with respect to tax rates, Simon should pay a tax rate higher than 7.5%. A 7.5% tax rate on Simon's $30,000 taxable income would result in $2,250 of tax (i.e., 7.5% x $30,000 = $2,250). Thus, Simon must pay more than $2,250 tax for the tax structure to be vertically equitable (i.e., to generate a tax rate more than 7.5%). This would result in a progressive tax rate structure. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 01-05 Apply appropriate criteria to evaluate alternate tax systems. Level of Difficulty: 3 Hard 110. Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not? The tax rate schedule is horizontally equitable because taxpayers in the same situation (Lucy and Ethel) pay the same tax ($4,500). The tax is not vertically equitable because the taxpayers with a greater ability to pay (Lucy and Ethel) do not pay more tax, nor do they pay a higher tax rate. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 01-05 Apply appropriate criteria to evaluate alternate tax systems. Level of Difficulty: 3 Hard
AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 01-05 Apply appropriate criteria to evaluate alternate tax systems. Level of Difficulty: 3 Hard 109. Given the following tax structure, what amount of tax would need to be assessed on Carrie to make the tax horizontally equitable? What is the minimum tax that Simon should pay to make the tax structure vertically equitable based on Fantasia's tax rate? This would result in what type of tax rate structure? Horizontal equity means that two taxpayers in similar situations pay the same tax. Thus, to make the tax structure horizontally equitable, Carrie should pay $1,500 in tax. Fantasia's average tax rate is 7.5%. To be vertically equitable with respect to tax rates, Simon should pay a tax rate higher than 7.5%. A 7.5% tax rate on Simon's $30,000 taxable income would result in $2,250 of tax (i.e., 7.5% x $30,000 = $2,250). Thus, Simon must pay more than $2,250 tax for the tax structure to be vertically equitable (i.e., to generate a tax rate more than 7.5%). This would result in a progressive tax rate structure. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 01-05 Apply appropriate criteria to evaluate alternate tax systems. Level of Difficulty: 3 Hard 110. Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is it vertically equitable? Why or why not? The tax rate schedule is horizontally equitable because taxpayers in the same situation (Lucy and Ethel) pay the same tax ($4,500). The tax is not vertically equitable because the taxpayers with a greater ability to pay (Lucy and Ethel) do not pay more tax, nor do they pay a higher tax rate. AACSB: Analytic AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Apply Learning Objective: 01-05 Apply appropriate criteria to evaluate alternate tax systems. Level of Difficulty: 3 Hard
test-bank-essentials-of-federal-taxation-1st-edition-spilker.docx