Name: _________________________________
Section (circle one): 12:30 pm / 2:00 pm / 3:30 pm
Chapter 1 Homework
1. The table below gives the taxable income and taxes for three taxpayers under a hypothetical tax
system.
A) Is the tax rate structure of this tax system
Taxpayer Income
Taxes
proportional, regressive, or progressive?
A
$50,000
$20,000
__________________
B
$100,000
$35,000
B) Give a real world example of a type of tax
C
$150,000
$45,000
that has this tax rate structure:
_________________
2. The table below gives the taxable income and taxes for three taxpayers under a hypothetical tax
system.
A) Is the tax rate structure of this tax system
Taxpayer Income
Taxes
proportional, regressive, or progressive?
A
$50,000
$5,000
__________________
B
$100,000
$10,000
B) Give a real world example of a type of tax
C
$150,000
$15,000
that has this tax rate structure:
_________________
3. The table below gives the taxable income and taxes for three taxpayers under a hypothetical tax
system.
A) Is the tax rate structure of this tax system
Taxpayer Income
Taxes
proportional, regressive, or progressive?
A
$50,000
$5,000
__________________
B
$100,000
$15,000
B) Give a real world example of a type of tax
C
$150,000
$30,000
that has this tax rate structure:
_________________
4. Please list the three largest sources of tax revenue for the federal government in order (consider
the personal income tax and corporate income tax as separate sources):
1) _______________
2) _______________
3) _______________
5. Please list the three largest expenses for the federal government (order doesn’t matter):
________________
________________
________________
6. Circle one option: The city of Springfield recently raised the per pack tax on cigarettes. The city
government assumed the total number of cigarettes purchased in the city would remain roughly
the same and estimated the tax increase would raise approximately $20 million in revenue.
However, the tax only raised $15 million because many Springfield residents started to drive
outside of the city limits to buy all of their cigarettes. The city government overestimated the
revenue impact of the cigarette tax increase because it used ( Static / Dynamic ) revenue
forecasting which assumes taxpayer behavior will not change.
7. Circle one option in each set of parenthesis: The idea that some people will work fewer hours
after a tax rate decrease because they care about maintaining the same after-tax income is referred
to as the ( Income / Substitution ) effect. The idea that some people will work more hours after
a tax rate decrease because the after-tax returns to work are greater is referred to as the ( Income
/ Substitution ) effect.
8. Compared to the old tax law, 24 million less taxpayers are expected to take the mortgage interest
deduction under the new tax law. Thus, homeowners and renters with the same pretax income
should be more likely to pay similar taxes under the new tax law. As a result, the new tax law
increases ____________ equity between home owners and those who rent.
a. horizontal
b. vertical
For questions 9 and 10, you need to access Apple Inc. most recent 10-K for the period ending
September 30, 2018. I recommend just using the website www.sec.gov to access it.
9. What was Apple’s GAAP effective tax rate for the year ending September 30, 2018?
10. What was Apple’s cash effective tax rate for the year ending September 30, 2018?