Chapter 1

Chapter 1 - Acct 3400 Taxation of Individuals Chapter 1...

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Acct 3400 Taxation of Individuals Chapter 1 Practice Questions Question 1: Which of the following scenarios represents a proportional tax? Which of the following scenarios represents a progressive tax? Option A: Jane earns $35,000 per year as a customer service representative. John earns $350,000 per year as an investment banker. Each pays a tax of 20% on their income. Option B: Nate earns $25,000 per year as a waiter. Nan earns $250,000 per year as a physician. Nate pays a tax at a rate of 10% of his income. Nan pays tax at a rate of 35% of her income. Explanation: Option A represents a proportional tax because the rate remains constant for any given level of income. Option B represents a progressive tax because the rate is higher as taxable income increases. Question 2: Heather is a resident of Utah. Recently, while on a cruise in Alaska, she purchased a portrait of the Alaskan skyline for $1000. Alaska does not have a sales tax and therefore Heather paid none. When Heather files her Utah
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Chapter 1 - Acct 3400 Taxation of Individuals Chapter 1...

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