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# 32 - 793,928,208,950 ============== Compare that number...

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37. Use the information in Table 1-3. If the federal tax system was changed to a proportional tax rate structure with a tax rate of 17%, calculate the amount of tax liability for 2004 for all taxpayers. How does this amount differ from the actual liability? Answer: The tax liability assuming a 17% flat rate is calculated by adding up the taxable income for all income ranges and multiplying it by 17%. Total taxable income: \$ 37,391,410,000 260,156,186,000 559,645,602,000 1,339,962,032,000 962,802,185,000 1,510,208,520,000 ------------------------ \$4,670,165,935,000 X .17 ------------------------ \$
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Unformatted text preview: 793,928,208,950 ============== Compare that number with the total tax liability on Table 1-3: \$ 3,065,745,000 23,788,480,000 62,128,560,000 178,512,551,000 175,205,533,000 388,995,463,000-----------------------\$ 831,696,331,000 ============= A 17% flat tax would raise about \$794 billion of tax revenue compared to \$832 billion of actual tax revenue. Thus, instituting a 17% flat tax on the same tax base would mean lower tax revenue of about \$38 billion. Note, however, that the distribution of that liability would be significantly different across the income ranges presented....
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