Question

1. If the government raised the limits on the amount of wage income that is subject to the F.I.C.A. tax, this would:

a. Move the Lorenz curve further from the line of income equality

b. Have no effect on the Lorenz curve

c. Raise the tax burden on all wage earners

d. none of the above

 

2. The California State sales tax is considered regressive because it:

a. Imposes a lower effective tax rate on higher-income taxpayers

b. Taxes poor people for basic necessities

c. Only taxes wage income

d. All of the above

 

3. Assume the marginal tax rate is 12% for the first $40,000 of taxable income, 28% for taxable income from $40,0001 and to $100,000 and 30% for taxable income above $100,000. If Mr. Smith had a taxable income of $120,000 how much tax does he owes?

a. $27,600 (I think this is the answer)
b. $33,600

c. $34,000

d. $36,000

 

4. In question 3, what is Mr. Smith's nominal tax rate?
a. 12%

b. 23%

c. 28% or

d. 30%