Chapter 6: Q. 6.12 (page 140)
Between 2017 and 2018, the income received by a company located in a city rose from \(5,000,000 to \)6,000,000. The annual city income taxes that the company paid increased from \(250,000 to \)500,000. What was the company's average city income tax rate in each year?
5% and 8.33%
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Why might pressures to satisfy government budget constraints give state governments incentives to seek to tax remote sales even if they were to determine that actual net revenues collected likely would be less than originally estimated?
Explain the structure of the U.S. income tax system.
Consider Figure 6-3. Suppose that the government raises its sales tax from 4 percent to 6 percent. Does the direction of the effect on government's tax revenue indicated by the figure's dynamic tax analysis accord with the prediction that would have been forthcoming from static tax analysis? Explain briefly.
For purposes of assessing income taxes, there are three official income levels for workers in a small country: high, medium, and low. For the last hour on the job during a 40-hour workweek, a high income worker pays a marginal income tax rate of 15 percent, a medium-income worker pays a marginal tax rate of 20 percent, and a low-income worker is assessed a 25 percent marginal income tax rate. Based only on this information, does this nation's income tax system appear to be progressive, proportional, or regressive?
Given that in recent years, the governments of many nations have been reducing corporate income tax rates in relation to the US rate (which remains one of the world's highest), is the US tax base shrinkage likely to slow down or speed up? Explain.
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