Category Spent By Federal Government State and Local Government National defense Libraries Police Medicare When the total receipts of the federal government exceed total spending, the government is said to run a budget surplus .
2. Taxes paid for a given income levelBased on the IRS table, Alex calculates that his marginal tax rate is 33% when his annual income is $300,000.Alex calculates that he owes $83,897 in income taxes for 2011.Alex then calculates that his average tax rate is 28% , based on the annual income level and the amount of taxes he owes for 2011.After figuring out what he owes in taxes in 2011, Alex decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $3,000 of taxable income from the federal government.The maximum amount that Alex is willing to pay to learn this strategy and reduce his taxable income by $3,000 is $990 . (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in income and shelters $10,000 pays income tax on only $40,000.)3. Identifying transfer paymentsComplete the following table by indicating which of the following government expenditures or programs provide the best examples of transfer payments.Government Expenditure or ProgramGood Example of Transfer Payments? 4. Principles of tax equityWhat does the principle of horizontal equity state? 5. Computing and interpreting average tax ratesIn a hypothetical economy, Antonio earns $17,000, Caroline earns $34,000, and Dmitri earns $51,000 in annual income. The following table shows the annual taxable income and tax liability for these three single individuals. For example, Antonio, who earns $17,000, owes $4,250 in taxes.Use the tax liability figures provided to complete the following table by computing the average tax rate for Antonio, Caroline, and Dmitri with an annual income of $17,000, $34,000, and $51,000, respectively.
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