Sam is a single person. He earned $80,000 last year. Among his expenditure last

Question

Sam is a single person. He earned $80,000 last year. Among his expenditure last year were $10,000 on interest payment of his home mortgage, $2,500 on the principal of his home loan, $700 in charitable contributions, $450 on health care and $392 for food while at work. The current standard deduction for a single person is $5,800 and the personal exemption is $3,700. a, Please calculate how much Sam owes in taxes to the government. Be careful about which item above is deductible if he chooses itemized deduction. Show and label your work to facilitate the awarding of partial credit. Please use the tax table below.

b, What is his average tax rate? (% please)

c, What is his marginal tax rate? (% please)

d, Is this tax a progressive one? Briefly explain.

e, Using Sam, the person in this example, please explain how the United States federal income tax might not be horizontally equitable.

Taxable Income Over $0 $8,500 $34,500 % on Excess 10% 15% 2 5% | Of the Amount Over But Not Over | Pay % $8,500 $34,500 $83,600 S0 $850 $4,750 $0 $8,500 $34,500

Explanation / Answer

Ans :

given data

Sam earning last year = $80,000

expenditure = $10,000

home mortgage = $ 2,500

home loan, $700 in charitable contributions

health care = $450

for food while at work = $392

The current standard deduction for a single person is = $5,800

the personal exemption is = $3,700

a): Sam owes in taxes to the government

Sam last year income is = $80000

                        deductions = 2,500+ 700 + 450 + 5800 = 9450

                    income after deductions = 70550

As per table value the Sam income is lies in the range of

$34500 to $ 83600

so the pay % = $ 4750 + 25 % (on Excess)

                    Net Taxable income    = $ 5937.5

b)   The normal expense rate is the assessment rate you pay on pay when you include all wellsprings of assessable wage and gap that number into the measure of duties you owe.

= total amount of taxes paid / Taxable income

= 5937.5 / 70550  

= 40 %

C) The minimal assessment rate is the rate of expense connected to your pay for every duty section in which you qualify. Basically the minimal duty rate is the rate taken from your next dollar of assessable pay over a pre characterized pay edge.The negligible expense rate incorporates government, state and neighborhood pay charges, and also elected finance and independent work charges. This varies from the normal expense rate, which is the aggregate assessment paid as a rate of aggregate wage earned.

d, e) An expense is a legislative charge imposed on an item salary or action. Case of duties incorporate deals assessment and pay charge. You can likewise consider permitting charges as duties for example permit expenses for auto enlistment driving chasing and shaping a business element. An assessment rate is the rate of the estimation of property or wage to be paid to the administration as a tax.Taxes are to be recognized from costs forced by a legislature for merchandise and administrations that it gives. A cost is a cash installment made as a state of getting products or administrations. It serves as an apportioning gadget gave that the cost is sure and gave that the measure of the products or administrations the purchaser gets consequently relies on the cost. On the off chance that an administration supplies water and charges as indicated by the measure of water taken by the purchaser the gadget is a cost and not a duty.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.