Full Download PDF of Test Bank For McGraw-Hill's Taxation of Individuals 2020 Edition, 11th by Spilker All Chapter

Test Bank for McGraw-Hill’s Taxation of
Individuals 2020 Edition, 11th by Spilker

Go to download the full and correct content document:
https://testbankmall.com/product/test-bank-for-mcgraw-hills-taxation-of-individuals-20
20-edition-11th-by-spilker/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
Solution Manual for McGraw-Hill’s Taxation of

Individuals 2020 Edition, 11th by Spilker
https://testbankmall.com/product/solution-manual-for-mcgraw-
hills-taxation-of-individuals-2020-edition-11th-by-spilker/
Test Bank for McGraw-Hill’s Taxation of Individuals and

Business Entities 2020 Edition, 11th by Spilker
https://testbankmall.com/product/test-bank-for-mcgraw-hills-
taxation-of-individuals-and-business-entities-2020-edition-11th-
by-spilker/

Individuals and Business Entities 2020 Edition, 11th by
Spilker
hills-taxation-of-individuals-and-business-
entities-2020-edition-11th-by-spilker/
Test Bank for McGraw-Hill’s Essentials of Federal

Taxation 2020 Edition, 11th by Spilker
https://testbankmall.com/product/test-bank-for-mcgraw-hills-
essentials-of-federal-taxation-2020-edition-11th-by-spilker/
Solution Manual for McGraw-Hill’s Taxation of Business
Entities 2020 Edition, 11th by Spilker
hills-taxation-of-business-entities-2020-edition-11th-by-spilker/

Individuals and Business Entities 2019 Edition, 10th by
Spilker
hills-taxation-of-individuals-and-business-
entities-2019-edition-10th-by-spilker/
McGraw-Hill’s Taxation of Individuals and Business

Entities 2014 Edition Spilker 5th Edition Test Bank
https://testbankmall.com/product/mcgraw-hills-taxation-of-
individuals-and-business-entities-2014-edition-spilker-5th-
edition-test-bank/
McGraw-Hill’s Taxation of Business Entities, 2014

Edition Spilker 5th Edition Test Bank
https://testbankmall.com/product/mcgraw-hills-taxation-of-
business-entities-2014-edition-spilker-5th-edition-test-bank/
Taxation of Individuals 2018 Edition 9th Edition

Spilker Test Bank
https://testbankmall.com/product/taxation-of-
individuals-2018-edition-9th-edition-spilker-test-bank/
2
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
4) Margaret recently received a parking ticket. This is a common example of a local tax.
Answer: FALSE
Difficulty: 1 Easy
Topic: What Qualifies as a Tax?
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of taxes.
Bloom's: Remember
AACSB: Reflective Thinking
AICPA: BB Critical Thinking
5) George recently paid $50 to renew his driver's license. The $50 payment is considered a tax.
Answer: FALSE
Explanation: A tax is a payment required by a government that is unrelated to any specific
benefit or service received by the government.
Difficulty: 1 Easy
Bloom's: Remember
6) A 1 percent charge imposed by a local government on football tickets sold is not considered a
tax if all proceeds are earmarked to fund local schools.
Answer: FALSE
Difficulty: 2 Medium
Bloom's: Understand
7) One key characteristic of a tax is that it is a required payment to a governmental agency.
Answer: TRUE
Bloom's: Analyze
3
8) Common examples of sin taxes include the taxes imposed on airline tickets and gasoline.
Answer: FALSE
Bloom's: Analyze
9) One benefit of a sin tax (e.g., a tax on cigarettes) is that it should increase the demand for the
products being taxed.
Answer: FALSE
Bloom's: Analyze
10) In addition to raising revenues, specific U.S. taxes may have other objectives (e.g., economic
or social objectives).
Answer: TRUE
Bloom's: Analyze
11) The two components of the tax calculation are the tax rate and the taxpayer's status.
Answer: FALSE
Explanation: Tax equals the tax base multiplied by the tax rate.
Topic: How to Calculate a Tax
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.
Bloom's: Analyze
4
12) The tax base for the federal income tax is taxable income.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Analyze
13) A flat tax is an example of a graduated tax system.
Answer: FALSE
Difficulty: 1 Easy
Bloom's: Analyze
14) The main difficulty in calculating an income tax is determining the correct amount of the tax
base.
Answer: TRUE
Bloom's: Remember
15) A taxpayer's average tax rate is the most appropriate tax rate to use in tax planning.
Answer: FALSE
Explanation: The marginal tax rate is particularly useful in tax planning because it represents
the rate of taxation or savings that would apply to additional taxable income or additional tax
deductions.
Bloom's: Remember
5
16) The effective tax rate, in general, provides a better depiction of a taxpayer's tax burden than
the average tax rate.
Answer: TRUE
Bloom's: Remember
17) The effective tax rate expresses the taxpayer's total tax as a percentage of the taxpayer's
taxable and nontaxable income.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
18) In a proportional (flat) tax rate system, the marginal tax rate will always equal the average
tax rate.
Answer: TRUE
Bloom's: Analyze
19) In a regressive tax rate system, the marginal tax rate will often be greater than the average
tax rate.
Answer: FALSE
Bloom's: Analyze
6
20) A sales tax is a common example of a progressive tax rate structure.
Answer: FALSE
Bloom's: Analyze
21) In terms of effective tax rates, the sales tax can be viewed as a regressive tax.
Answer: TRUE
Bloom's: Analyze
22) While sales taxes are quite common, currently the U.S. federal government does not impose
a sales tax.
Answer: TRUE
Topic: Types of Taxes
Learning Objective: 01-04 Identify the various federal, state, and local taxes.
Bloom's: Analyze
23) The largest federal tax, in terms of revenue collected, is the Social Security tax.
Answer: FALSE
Explanation: The most significant tax assessed by the U.S. government is the income tax.
Bloom's: Understand
7
24) The 9th Amendment to the U.S. Constitution removed all doubt that a federal income tax was
allowed under the U.S. Constitution.
Answer: FALSE
Explanation: The 16th amendment removed all doubt that a federal income tax was allowed
under the U.S. Constitution and was ratified in February 1913.
Bloom's: Understand
25) A common example of an employment-related tax is the Medicare tax.
Answer: TRUE
Bloom's: Understand
26) Self-employment taxes are charged on self-employment income in addition to any federal
income tax.
Answer: TRUE
Bloom's: Analyze
27) Excise taxes are typically levied on the value of a good purchased.
Answer: FALSE
Explanation: Excise taxes are levied on the quantity of products purchased.
Bloom's: Analyze
8
28) The estate tax is assessed based on the fair market values of transfers made during a
taxpayer's life.
Answer: FALSE
Explanation: The estate tax is based on the fair value of wealth transfers upon death.
Bloom's: Analyze
29) A use tax is typically imposed by a state on goods purchased within the state.
Answer: FALSE
Explanation: A use tax is levied on goods owned, possessed, or consumed within a state that
were not purchased within the state.
Bloom's: Analyze
30) Property taxes may be imposed on both real and personal property.
Answer: TRUE
Bloom's: Analyze
31) Relative to explicit taxes, implicit taxes are much easier to estimate.
Answer: FALSE
Bloom's: Analyze
9
32) Implicit taxes are indirect taxes on tax-favored assets.
Answer: TRUE
Bloom's: Analyze
33) Dynamic forecasting does not take into consideration taxpayers' responses to a tax change
when estimating tax revenues.
Answer: FALSE
Topic: Evaluating Alternative Tax Systems
Learning Objective: 01-05 Apply appropriate criteria to evaluate alternative tax systems.
Bloom's: Analyze
34) The income and substitution effects are two opposing effects that one could consider in static
forecasting.
Answer: FALSE
Bloom's: Analyze
35) Horizontal equity is defined in terms of taxpayers in similar situations whereas vertical
equity is defined in terms of taxpayers in different situations.
Answer: TRUE
Difficulty: 1 Easy
Bloom's: Remember
10
36) Regressive tax rate structures are typically considered to be vertically equitable.
Answer: FALSE
Bloom's: Analyze
37) Estimated tax payments are one way the federal income tax system addresses the "certainty"
criterion in evaluating tax systems.
Answer: FALSE
Bloom's: Analyze
38) One must consider the "economy" criterion in evaluating tax systems from both the
taxpayer's and the government's perspective.
Answer: TRUE
Bloom's: Understand
11
39) Taxes influence which of the following decisions?
A) Business decisions
B) Personal decisions
C) Political decisions
D) Investment decisions
E) All of the choices are correct.
Answer: E
Difficulty: 1 Easy
Topic: Who Cares About Taxes and Why?
Learning Objective: 01-01 Demonstrate how taxes influence basic business, investment,
personal, and political decisions.
Bloom's: Remember
40) Margaret was issued a $150 speeding ticket. This is:

A) a tax because payment is required by law.
B) a tax because the payment is not related to any specific benefit received from the government
agency collecting the ticket.
C) not a tax because it is considered a fine intended to punish illegal behavior.
D) a tax because it is imposed by a government agency.
E) not a tax because Margaret could have avoided payment if she did not speed.
Answer: C
Bloom's: Analyze
12
41) Which of the following is a tax?
I. A 1 percent special sales tax for funding local road construction.

II. A fee paid to the state for a license to practice as an attorney.
III. An income tax imposed by Philadelphia on persons working within the city limits.
IV. A special property assessment for installing a new water system in the taxpayer's
neighborhood.
A) Only I is correct.
B) Only IV is correct.
C) Only III is correct.
D) III and IV are correct.
E) I and III are correct.
Answer: E
Explanation: A tax is a payment required by a government that is unrelated to any specific
benefit or service received from the government.
Bloom's: Understand
42) Which of the following is considered a tax?

A) Tolls
B) Parking meter fees
C) Annual licensing fees
D) A local surcharge paid on retail sales to fund public schools
E) Entrance fees paid at national parks
Answer: D
Difficulty: 1 Easy
Bloom's: Remember
13
43) Earmarked taxes are:
A) taxes assessed only on certain taxpayers.
B) taxes assessed to fund a specific purpose.
C) taxes assessed for only a specific time period.
D) taxes assessed to discourage less desirable behavior.
E) None of the choices are correct.
Answer: B
Difficulty: 1 Easy
Bloom's: Remember
44) Sin taxes are:

A) taxes assessed by religious organizations.
B) taxes assessed on certain illegal acts.
C) taxes assessed to discourage less desirable behavior.
D) taxes assessed to fund a specific purpose.
Answer: C
Explanation: Surcharges on alcohol and tobacco products are examples of "sin taxes".
Bloom's: Understand
14
45) To calculate a tax, you need to know:
I. the tax base

II. the taxing agency
III. the tax rate
IV. the purpose of the tax
A) Only I is correct.
B) Only IV is correct.
C) Only III is correct.
D) Items I through IV are correct.
E) I and III are correct.
Answer: E
Difficulty: 1 Easy
Bloom's: Remember
46) Which of the following is not an example of a graduated tax rate structure?
A) Progressive tax rate structure
B) Proportional tax rate structure
C) U.S. federal income tax
D) Regressive tax rate structure
E) None of the choices are correct
Answer: B
Explanation: A proportional tax rate structure, also known as a flat tax, imposes a constant tax
rate throughout the tax base.
Bloom's: Understand
15
47) The difficulty in calculating a tax is typically in the determination of:
A) the correct tax rate.
B) where to file the tax return.
C) the tax base.
D) the due date for the return.
Answer: C
Bloom's: Remember
48) Which of the following is not one of the basic tax rate structures?
A) Proportional
B) Equitable
C) Regressive
D) Progressive
E) All of these are different kinds of the basic tax rate structures
Answer: B
Bloom's: Remember
16
49) Marc, a single taxpayer, earns $60,000 in taxable income and $5,000 in interest from an
investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2019, how much
federal tax will he owe? (Round your final answer to the nearest whole dollar.) (Use tax rate
schedule.)
A) $13,200
B) $9,059
C) $7,638
D) $6,812
Answer: B
Explanation: $9,059 = $4,543 + 0.22 ($60,000 − $39,575)—rounded to the nearest dollar.
Bloom's: Apply
AACSB: Knowledge Application
investment in city of Birmingham bonds. Using the U.S. tax rate schedule for 2019, what is his
average tax rate (rounded)? (Round your final answer to the nearest whole percent.) (Use tax
rate schedule.)
A) 15.10 percent
B) 12.73 percent
C) 11.35 percent
D) 22.00 percent
Answer: A
Explanation: 15.10% = $9,059 / $60,000
Bloom's: Apply
17
investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2019, what is
his effective tax rate (rounded)? (Round your final answer to the nearest whole percent.) (Use
tax rate schedule.)
A) 20.31 percent
B) 13.94 percent
C) 11.75 percent
D) 10.48 percent
Answer: B
Explanation: 13.94% = $9,059 / ($60,000 + $5,000)
Bloom's: Apply
investment in city of Birmingham bonds. Using the U.S. tax rate schedule for year 2019, what is
his current marginal tax rate? (Use tax rate schedule.)
A) 12.00 percent
B) 22.00 percent
C) 24.00 percent
D) 32.00 percent
Answer: B
Explanation: See IRS rate schedule for single taxpayers.
Difficulty: 1 Easy
Bloom's: Apply
18
53) The city of Granby, Colorado, recently enacted a 1.5 percent surcharge on vacation cabin
rentals that will fund the city's new elementary school. This surcharge is an example of
________.
A) a sin tax to discourage undesirable behavior
B) a government fine
C) an earmarked tax
D) a sin tax to discourage undesirable behavior and an earmarked tax
Answer: C
Bloom's: Apply
54) The state of Georgia recently increased its tax on a carton of cigarettes by $2.00. What type
of tax is this?
A) A sin tax
B) An excise tax
C) It is not a tax; it is a fine
D) A sin tax and an excise tax are correct
Answer: D
Topic: What Qualifies as a Tax?; Types of Taxes
Learning Objective: 01-02 Discuss what constitutes a tax and the general objectives of taxes.;
01-04 Identify the various federal, state, and local taxes.
Bloom's: Apply
19
55) Which of the following is false?
A) A proportional tax rate structure imposes a constant tax rate while a progressive tax rate
structure imposes an increasing marginal rate related to the tax base.
B) The average tax rate changes under a proportional tax rate structure, but it is static for a
progressive tax rate system.
C) An example of a proportional tax is the tax on gasoline.
D) An example of a progressive tax is the federal tax on gifts.
Answer: B
Difficulty: 3 Hard
Bloom's: Remember
56) Which of the following is true?

A) A regressive tax rate structure imposes an increasing marginal tax rate as the tax base
increases.
B) Regressive tax structures are the most common tax rate structure.
C) An example of a regressive tax is an excise tax.
D) In terms of effective tax rates, a sales tax can be viewed as a regressive tax.
Answer: D
Bloom's: Remember
20
57) The ultimate economic burden of a tax is best captured by:
A) the marginal tax rate.
B) the effective tax rate.
C) the average tax rate.
D) the proportional tax rate.
Answer: B
Bloom's: Analyze
58) Which of the following taxes represents the largest portion of U.S. federal tax revenues?
A) Employment taxes
B) Corporate income taxes
C) Individual income taxes
D) Estate and gift taxes
Answer: C
Explanation: See Exhibit 1-4 in textbook.
Bloom's: Understand
59) Which of the following represents the largest percentage of average state tax revenue?
A) Sales tax
B) Individual income tax
C) Other
D) Property tax
Answer: A
Explanation: See Exhibit 1-5 in textbook.
Bloom's: Understand
21
60) Which of the following is true regarding use taxes?
A) A use tax is relatively easy to enforce compared to a sales tax.
B) Use taxes attempt to eliminate any tax advantage of purchasing goods out of state.
C) Use taxes encourage taxpayers to buy goods out of state to avoid paying sales tax in their
home state.
D) A use tax is generally a progressive tax.
Answer: B
Bloom's: Analyze
61) Which of the following is true regarding real property taxes and personal property taxes?
A) Personal property taxes are assessed on permanent structures and land.
B) Real property taxes are assessed on cars and boats.
C) All U.S. states currently impose personal property taxes.
D) Real property taxes are generally easier to administer than personal property taxes.
Answer: D
Bloom's: Analyze
62) Which of the following statements is true?

A) Municipal bond interest is subject to explicit federal tax.
B) Municipal bond interest is subject to implicit tax.
C) Municipal bonds typically pay a higher interest rate than corporate bonds with similar risk.
D) All of these statements are true.
E) None of these statements are true.
Answer: B
Bloom's: Understand
22
63) The concept of tax sufficiency:
A) suggests the need for tax forecasting.
B) suggests that a government should estimate how taxpayers will respond to changes in the
current tax structure.
C) suggests that a government should consider the income and substitution effects when
changing tax rates.
D) All of the choices are correct.
Answer: D
Difficulty: 3 Hard
Bloom's: Analyze
64) The substitution effect:

A) predicts that taxpayers will work harder to pay for consumer products when tax rates increase.
B) is one of the effects considered in static forecasting.
C) results in the government collecting more aggregate tax revenue than under the income effect.
D) is typically more descriptive for taxpayers with lower disposable income.
Answer: E
Bloom's: Analyze
23
65) Which of the following federal government actions would make sense if a tax system fails to
provide sufficient tax revenue?
A) Only issue treasury bonds.
B) Only cut funding to various federal projects.
C) Only increase federal spending.
D) Issue treasury bonds and cut funding to various federal projects but not increase federal
spending.
Answer: D
Bloom's: Analyze
66) Geronimo files his tax return as a head of household for year 2019. If his taxable income is
$72,000, what is his average tax rate (rounded)? (Use tax rate schedule.)
A) 14.28 percent
B) 6.31 percent
C) 19.08 percent
D) 22.00 percent
Answer: A
Explanation: [$6,065 + (($72,000 − $52,850) × 0.22)] / $72,000 = 14.28%
Bloom's: Apply
24
67) Al believes that SUVs have negative social and environmental effects because of their
increased carbon monoxide emissions. He proposes eliminating sales taxes on smaller
automobiles in favor of higher sales taxes levied on SUVs. Al performs some calculations and
comes to the conclusion that based on the current number of SUVs owned in the U.S., exactly
the same amount of total sales tax will be collected under his reformed system. Which of the
following concepts explains why Al's idea may not work?
A) The ability to pay principle
B) Horizontal equity
C) Substitution effect
D) Vertical equity
Answer: C
Bloom's: Apply
68) Which of the following would not be a failure of the horizontal equity concept?
A) Two taxpayers with identical income pay different amounts of tax because one taxpayer's
income includes tax-exempt interest.
B) Two taxpayers pay different property tax amounts on similar plots of land (i.e., same value)
because one plot of land is used to raise crops.
C) Two taxpayers pay different amounts of estate tax because one taxpayer's estate is worth
significantly more.
Answer: C
Bloom's: Apply
25
69) Which of the following is true regarding tax-advantaged assets?
A) They are typically subject to excise taxes to account for their low explicit taxes.
B) A corporate bond is typically considered a tax-advantaged asset.
C) They are often subject to implicit taxes.
D) A corporate bond is typically considered a tax-advantaged asset. They are often subject to
implicit taxes but they are not typically subject to excise taxes to account for their low explicit
taxes.
Answer: C
Bloom's: Understand
70) Congress recently approved a new, smaller budget for the IRS. What taxation concept
evaluates the cost of administering our tax law?
A) Convenience
B) Economy
C) Certainty
D) Equity
Answer: B
Bloom's: Understand
26
71) Employers often withhold federal income taxes directly from workers' paychecks. This is an
example of which principle in practice?
A) Convenience
B) Certainty
C) Economy
D) Equity
Answer: A
Bloom's: Understand
72) Which of the following principles encourages a vertically equitable tax system?
A) Pay-as-you-go
B) Economy
C) Income effects
D) Ability to pay principle
Answer: D
Bloom's: Understand
27
73) Manny, a single taxpayer, earns $65,000 per year in taxable income and an additional
$12,000 per year in city of Boston bonds. What is Manny's current marginal tax rate for 2019?
(Use tax rate schedule.)
A) 11.40 percent
B) 12.00 percent
C) 13.19 percent
D) 15.63 percent
Answer: E
Explanation: See IRS tax schedule for single filers; 22 percent.
Difficulty: 1 Easy
Bloom's: Apply
74) Manny, a single taxpayer, earns $65,000 per year in taxable income and an additional
$12,000 per year in city of Boston bonds.
If Manny earns an additional $35,000 in taxable income in 2019, what is his marginal tax
rate (rounded) on this income? (Use tax rate schedule.)
A) 18.01 percent
B) 22.00 percent
C) 22.90 percent
D) 24.00 percent
Answer: C
Explanation: ($18,175 – $10,159) / ($100,000 − $65,000) = 22.90%
Difficulty: 3 Hard
Bloom's: Apply
28
75) Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has
$15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income.
If Leonardo earned an additional $30,000 of taxable income this year, what would be the
marginal tax rate (rounded) on the extra income for 2019? (Use tax rate schedule.)
A) 22.00 percent
B) 18.81 percent
C) 24.00 percent
D) 23.72 percent
Answer: D
Explanation: ($20,575 − $13,459) / ($110,000 − $80,000) = 23.72%
Bloom's: Apply
If Leonardo instead had $30,000 of additional tax deductions for 2019, his marginal tax
rate (rounded) on the deductions would be: (Use tax rate schedule.)
A) 12.00 percent
B) 13.88 percent
C) 22.00 percent
D) 24.00 percent
Answer: C
Explanation: ($6,859 − $13,459) / ($50,000 − $80,000) = 22.00%
Difficulty: 3 Hard
Bloom's: Apply
29
If Leonardo and his wife file married filing jointly in 2019, what would be their average tax rate
(rounded)? (Use tax rate schedule.)
A) 12.00 percent
B) 22.00 percent
C) 15.63 percent
D) 18.70 percent
Answer: C
Explanation: $20,317/$130,000 = 15.63%
Bloom's: Apply
If Leonardo and his wife file married filing jointly in 2019, What is Leonardo and Theresa's
effective tax rate for 2019 (rounded)? (Use tax rate schedule.)
A) 12.00 percent
B) 15.63 percent
C) 21.04 percent
D) 22.00 percent
Answer: E
Explanation: $20,317 / ($80,000 + $50,000 + $15,000) = 14.01%
Bloom's: Apply
30
How much money would Leonardo and Theresa save if they file jointly instead of separately for
2019? (Use tax rate schedule.)
A) Nothing
B) $103.50
C) $309.75
D) $5,932.50
Answer: A
Explanation: $20,317 both separate and joint = $0.
Difficulty: 3 Hard
Bloom's: Apply
80) If Susie earns $750,000 in taxable income, how much tax will she pay as a single taxpayer
for 2019? (Use tax rate schedule.)
A) $215,640
B) $277,500
C) $242,488
D) $247,189
Answer: C
Explanation: $153,798.50 + 0.37($750,000 − $510,300) = $242,488
Bloom's: Apply
31
81) If Susie earns $750,000 in taxable income and files as head of household for year 2019, what
is Susie's average tax rate (rounded)? (Use tax rate schedule.)
A) 32.14 percent
B) 33.85 percent
C) 35.00 percent
D) 37.00 percent
Answer: A
Explanation: [$153,380 + 0.37($750,000 − $510,300)] / $750,000 = 32.14%
Bloom's: Apply
82) Eliminating the current system of withholding income taxes directly from employee
paychecks would:
A) violate the convenience criterion of federal taxation.
B) increase the rate of compliance.
C) make collection of federal income taxes easier.
Answer: A
Bloom's: Analyze
32
83) Curtis invests $250,000 in a city of Athens bond that pays 7 percent interest. Alternatively,
Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays
9 percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax
rate is 24 percent.
What is Curtis's after-tax rate of return on the city of Athens bond?

A) 5.32 percent
B) 6.84 percent
C) 7.00 percent
D) 9.00 percent
Answer: C
Explanation: The after-tax rate of return is the same as the pretax rate because the interest from
municipal bonds is tax-exempt.
Difficulty: 1 Easy
Bloom's: Apply
Curtis could have invested the $250,000 in a bond recently issued by Initech, Inc. that pays 9
percent interest with similar risk as the city of Athens bond. Assume that Curtis's marginal tax
rate is 24 percent.
How much implicit tax would Curtis pay on the city of Athens bond?
A) $17,500
B) $1,400
C) $1,300
D) $5,000
Answer: D
Explanation: The implicit tax equals the difference in pretax income earned from a similar
(same risk) bond. In this case: ($250,000 × 0.09) − ($250,000 × 0.07) = $5,000.
Bloom's: Apply
33
rate is 24 percent.
If Curtis invested in the Initech, Inc. bonds, what would be his after-tax rate of return from this
investment?
A) 5.32 percent
B) 7.00 percent
C) 6.84 percent
D) 2.52 percent
Answer: C
Explanation: [(1 − 0.24) × ($250,000 × 0.09)] / $250,000 = 0.0684
Bloom's: Apply
rate is 24 percent.
How much explicit tax would Curtis incur on interest earned on the Initech, Inc. bond?
A) $17,500
B) $5,400
C) $4,200
D) $12,600
Answer: B
Explanation: (250,000 × 0.09) × 0.24 = $5,400
Bloom's: Apply
34
87) Jackson has the choice to invest in city of Mitchell bonds or Sundial, Inc. corporate bonds
that pay 10 percent interest. Jackson is a single taxpayer who earns $55,000 annually. Assume
that the city of Mitchell bonds and the Sundial, Inc. bonds have similar risk.
What interest rate would the city of Mitchell have to pay in order to make Jackson indifferent
between investing in the city of Mitchell and the Sundial, Inc. bonds for 2019? (Use tax rate
schedule.)
A) 7.80 percent
B) 10.00 percent
C) 8.00 percent
D) 7.20 percent
Answer: A
Explanation: Jackson's marginal tax rate is 22 percent, so his after-tax rate of return on the
Sundial, Inc. bonds would be 7.8 percent. Therefore, the city of Mitchell must pay 7.8 percent to
make Jackson indifferent between the two bonds.
Bloom's: Apply
35
88) Jackson has the choice to invest in city of Mitchell bonds or Sundial, Inc. corporate bonds
that pay 10 percent interest. Jackson is a single taxpayer who earns $55,000 annually. Assume
that the city of Mitchell bonds and the Sundial, Inc. bonds have similar risk.
Assume the original facts as given except that Jackson is a head of household taxpayer and the
city of Mitchell pays interest of 8 percent. How would you advise Jackson to invest his money?
A) Invest in Sundial, Inc. bonds because their explicit tax is greater than the implicit tax on city
of Mitchell bonds.
B) Invest in city of Mitchell bonds because their implicit tax is greater than the explicit tax on
Sundial, Inc. bonds.
C) Invest in Sundial, Inc. bonds because their explicit tax is less than the implicit tax on city of
Mitchell bonds.
D) Invest in city of Mitchell bonds because their implicit tax is less than the explicit tax on
Sundial, Inc. bonds.
Answer: D
Explanation: Implicit tax on city of Mitchell bonds: 10% − 8% = 2%. Explicit tax on Sundial,
Inc. bonds: 10% × 0.22 = 2.2%.
Difficulty: 3 Hard
Bloom's: Apply
36
89) Oswald is beginning his first tax course and does not really have a solid understanding of the
role that taxes play in various decisions. Please describe for Oswald the various types of
decisions that taxes may influence.
Answer: Taxes are a part of everyday life and have a financial effect on many of the major
personal decisions that individuals face (e.g., investment decisions, evaluating alternative job
offers, saving for education expenses, gift or estate planning, etc.). Taxes play an equally
important role in fundamental business decisions such as the following:
• What organizational form should a business use? Where should the business locate?
• How should business acquisitions be structured?
• How should employees be compensated? What is the appropriate mix of debt and equity for the
business?
• Should the business rent or own equipment and property?
• How should the business distribute profits to its owners?
Savvy business decisions require consideration of all costs and benefits in order to evaluate the
merits of a transaction. Although taxes do not necessarily dominate these decisions, they do
represent large transaction costs that should be factored into the financial decision-making
process.
Taxes also play a major part in the political process. U.S. presidential candidates often
distinguish themselves from their opponents based upon their tax rhetoric. Indeed, the major
political parties generally have very diverse views of the appropriate way to tax the public.
Voters must have a basic understanding of taxes to evaluate the merits of alternative tax
proposals.
Difficulty: 3 Hard
Topic: Who Cares About Taxes and Why?
personal, and political decisions.
Bloom's: Apply
AICPA: BB Critical Thinking; FN Measurement
37
90) Determine if each of the following is a tax and why or why not.
a. $2.50 toll paid on the Florida Turnpike

b. $300 ticket for reckless driving
c. 1 percent local surcharge on hotel rooms to fund public roadways
d. 2 percent city surcharge on wages earned in the city of Philadelphia
Answer:
a. Not a tax because receiving a specific benefit for amount paid.
b. Not a tax, penalties/fines are not taxes by definition.
c. A tax, required payment imposed by local government, tax not tied to specific benefit received
by payer.
d. A tax, required payment imposed by local government, no specific benefit received by payer.
Difficulty: 3 Hard
Bloom's: Apply
91) Although the primary purpose of a tax system is to raise revenue, Congress uses the federal
tax system for other purposes as well. Describe the other ways in which Congress uses the
federal tax system. Be specific.
Answer: In addition to the general objective of raising revenue, Congress uses the federal tax
system to encourage certain behavior and discourage other behavior. The charitable contribution
deduction is intended to encourage taxpayers to support the initiatives of charitable organizations
(social objective) whereas deductions for retirement contributions are intended to encourage
retirement savings (social objective). Taxes are also often used to encourage investment and
stimulate the economy. Likewise, taxes are also used to discourage certain less desirable
taxpayer behavior. For example, "sin taxes" impose relatively high surcharges on alcohol and
tobacco products to discourage their use.
Difficulty: 3 Hard
Bloom's: Apply
38
92) There are several different types of tax rates that taxpayers might use in different contexts.
Describe each tax rate and how a taxpayer might use it.
Answer: The marginal tax rate is the tax rate that applies to the taxpayer's additional taxable
income or deductions that the taxpayer is evaluating in a decision. Specifically,
Marginal Tax Rate

ΔTax = (New Total Tax − Old Total Tax)
=
ΔTaxable (New Taxable Income − Old Taxable
Income Income)
The marginal tax rate is particularly useful in tax planning because it represents the rate of
taxation or savings that would apply to additional taxable income or tax deductions.
The average tax rate represents the taxpayer's average level of taxation on each dollar of taxable
income. Specifically,
Average Tax Rate = Total Tax

Taxable Income
The average tax rate is often used in budgeting tax expense as a portion of income (i.e., what
percent of taxable income earned is paid in tax).
The effective tax rate represents the taxpayer's average rate of taxation on each dollar of total
income (i.e., taxable and nontaxable income). Specifically,
Effective Tax Rate = Total Tax

Total Income
Relative to the average tax rate, the effective tax rate provides a better depiction of a taxpayer's
tax burden because it depicts the taxpayer's total tax paid as a ratio of the sum of both taxable
and nontaxable income earned.
Difficulty: 3 Hard
Bloom's: Apply
39
93) Ricky and Lucy are debating several types of taxes. Their debate has focused on the different
types of tax rate structures and whether they are "fair." Please define each tax rate structure,
provide examples of each structure, and discuss how each structure may be viewed with respect
to vertical equity.
Answer: A proportional (flat) tax rate structure imposes a constant tax rate throughout the tax
base. Common examples of proportional taxes include sales taxes and excise taxes (i.e., taxes
based on quantity, such as gallons of gas purchased).
A progressive tax rate structure imposes an increasing marginal tax rate as the tax base increases.
Common examples of progressive tax rate structures include federal and state income taxes and
federal estate and gift taxes.
A regressive tax rate structure imposes a decreasing marginal tax rate as the tax base increases.
Regressive tax rate structures are not common. In the United States, the Social Security tax and
federal and state unemployment taxes employ a regressive tax rate structure. However, there are
other regressive taxes when the tax is viewed in terms of effective tax rates. For example, a sales
tax by definition is a proportional tax—i.e., as taxable purchases increase, the sales tax rate (i.e.,
the marginal tax rate) remains constant. Nonetheless, when you consider that the proportion of
one's total income spent on taxable purchases likely decreases as total income increases, the sales
tax may be considered a regressive tax.
One can view vertical equity in terms of tax dollars paid or in terms of tax rates. Proponents of
proportional tax rate structures are more likely to argue that vertical equity is achieved when
taxpayers with a greater ability to pay tax simply pay more in tax dollars. Thus, from this view, a
proportional tax rate achieves vertical equity.
Proponents of a progressive tax system are more likely to argue that taxpayers with a greater
ability to pay should be subject to a higher tax rate. This view is based upon the argument that
the relative burden of a flat tax rate decreases as a taxpayer's income increases. Thus, vertical
equity is achieved only when taxpayers with a greater ability to pay are subject to a higher tax
rate.
Regressive tax rate structures are generally considered not to satisfy vertical equity (unless one is
a strong advocate of the belief that those with a greater ability to pay do so simply by paying
more tax dollars, albeit at a lower tax rate).
Difficulty: 3 Hard
Topic: Evaluating Alternative Tax Systems; How to Calculate a Tax
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.; 01-05
Apply appropriate criteria to evaluate alternative tax systems.
Bloom's: Apply
40
94) Bart is contemplating starting his own business. His new business would operate as a sole
proprietorship and would require hiring several employees. Describe the employment-related
taxes that Bart should be aware of as he starts his new business as a self-employed business
owner.
Answer: Employment taxes consist of the Old Age, Survivors, and Disability Insurance
(OASDI) tax, commonly called Social Security tax, and the Medical Health Insurance (MHI) tax,
known as the Medicare tax. The Social Security tax pays the monthly retirement, survivor, and
disability benefits for qualifying individuals, whereas the Medicare tax pays for medical
insurance for individuals who are elderly or disabled. The tax base for the Social Security and
Medicare taxes is wages or salary, and the rates are 12.4 percent and 2.9 percent, respectively.
Employers and employees split this tax equally. Thus, Bart will have to pay the employer's
portion of these taxes for his employees.
As a self-employed individual, Bart must also pay the self-employment tax, which is basically
the same as the employer's and employee's share of the Social Security and Medicare taxes. The
tax rates for these taxes are 12.4 percent and 2.9 percent, respectively, and the tax base is net
self-employment income. The self-employment tax is in addition to any federal income tax owed
by the individual.
In addition to the Social Security and Medicare taxes, employers are also required to pay federal
and state unemployment taxes, which fund temporary unemployment benefits for individuals
terminated from their jobs without cause. The tax base for the unemployment taxes is also wages
or salary.
Difficulty: 3 Hard
Bloom's: Apply
41
95) Raquel recently overheard two journalism students discussing the merits of the federal tax
system. One student offered as an example of unfairness a well-known politician's spouse, who
paid little income tax, as most of the spouse's income was earned in the form of municipal bond
interest. What type of taxes is the journalism student considering in his example? What type of
taxes is he ignoring? Define each type of tax. What role does each type of tax play in calculating
relative tax burdens? What role does each type of tax play in evaluating fairness?
Answer: The student is considering explicit taxes and ignoring implicit taxes. An explicit tax is
a tax that is directly imposed by a government unit and easily quantified. Implicit taxes are the
reduced rates of pretax return that a tax-favored asset produces (e.g., the lower pretax rate of
return earned by tax exempt municipal bonds). Although implicit taxes are real and equally
important in understanding our tax system, they are difficult to quantify.
Because implicit taxes are difficult to quantify, they are not generally considered when
calculating average and effective tax rates (i.e., when assessing relative tax burdens). Since
implicit taxes are ignored in these calculations, taxpayers may conclude that groups of taxpayers
investing in tax-advantaged assets (subject to implicit tax) do not pay their fair share of tax as
represented by a low effective tax rate.
Difficulty: 3 Hard
Topic: Types of Taxes; Evaluating Alternative Tax Systems
Learning Objective: 01-04 Identify the various federal, state, and local taxes.; 01-05 Apply
appropriate criteria to evaluate alternative tax systems.
Bloom's: Apply
42
96) Mandy, the mayor of Bogart and a strong advocate of a clean downtown, is proposing an
increase in the city sales tax from 7 percent to 50 percent on all packs of chewing gum purchased
in Bogart. Based on the current gum sales, Mandy estimates that this tax will actually reduce the
tax revenue on gum sales. What type of forecasting is Mandy using to derive her tax revenue
estimates? What "effect" is her estimate based on? Does this necessarily imply that Mandy will
be happy given her desire to have a clean downtown?
Answer: Mandy's forecast is based on dynamic forecasting (i.e., she is considering how
taxpayers may alter their activities in response to the tax law change). Given that Mandy is
projecting a decrease in tax revenues, her estimates must be based on the substitution effect—
i.e., taxpayers are likely to substitute nontaxable activities (e.g., simply not purchase gum) for
taxable purchases. The decreased tax revenue from gum sales does not necessarily imply that
Mandy will achieve a cleaner city, as taxpayers may simply buy their gum outside the city. This
will depend on how close the city is to other towns/neighborhoods that do not impose the high
gum tax.
Difficulty: 3 Hard
Bloom's: Apply
43
97) Milton and Rocco are having a heated debate regarding a national sales tax. Milton argues
that a national sales tax is a proportional, vertically equitable tax. Rocco argues that a national
sales tax would be a regressive, vertically inequitable tax. Explain both sides of the argument.
Answer: A sales tax by definition is a proportional tax—i.e., as taxable purchases increase, the
sales tax rate (i.e., the marginal tax rate) remains constant. For this reason, Milton is correct.
Nonetheless, when you consider that the proportion of one's total income spent on taxable
purchases likely decreases as total income increases, the sales tax may be considered a regressive
tax. For this reason, Rocco is correct.
Vertical equity is achieved when taxpayers with greater ability to pay tax pay more tax relative to
taxpayers with a lesser ability to pay tax. One can view vertical equity in terms of tax dollars
paid or in terms of tax rates. Proponents of a sales tax (e.g., Milton) are more likely to argue that
vertical equity is achieved when taxpayers with a greater ability to pay tax pay more in tax
dollars. Opponents of a national sales tax (e.g., Rocco) are more likely to argue that taxpayers
with a greater ability to pay should be subject to a higher tax rate. This view is based upon the
argument that the relative burden of a sales tax decreases as a taxpayer's income (e.g., disposable
income) increases.
Difficulty: 3 Hard
Topic: Evaluating Alternative Tax Systems; How to Calculate a Tax
Learning Objective: 01-03 Describe the different tax rate structures and calculate a tax.; 01-05
Apply appropriate criteria to evaluate alternative tax systems.
Bloom's: Apply
44
98) Evaluate the U.S. federal tax system on the certainty and economy criteria.
Answer: Certainty means that taxpayers should be able to determine when to pay the tax, where
to pay the tax, and how to determine the tax. It is relatively easy to determine when and where to
pay the federal income tax. For example, individual federal income tax returns and the remaining
balance of taxes owed must be filed with the Internal Revenue Service each year on or before
April 15th (or the first business day following April 15th). Thus, from this perspective, the
federal income tax scores high.
However, the federal income tax is often criticized as being complex. What are
taxable/nontaxable forms of income? What are deductible/nondeductible expenses? When should
income or expense be reported? For many taxpayers (e.g., wage earners with few investments),
the answers to these questions are straightforward. For other taxpayers (e.g., business owners,
individuals with a lot of investments), the answers to these questions are nontrivial. Constant tax
law changes enacted by Congress also add to the difficulty in determining the proper amount of
income tax to pay. These changes can make it difficult to determine a taxpayer's current tax
liability, much less plan for the future. From this perspective of "certainty," the federal income
tax system does not fare so well.
Economy requires that a good tax system should minimize the compliance and administration
costs associated with the tax system. Economy can be viewed from both the taxpayers' and
government's perspectives. From the government's perspective, the federal tax system fares well
with respect to economy. For example, the current IRS budget represents approximately ½ of a
percent of every tax dollar collected. Compared to the typical costs of a collection agency, this is
quite a low percentage cost.
From the taxpayer's perspective of economy, the federal income tax does not fare so well. The
income tax is often criticized for the compliance costs imposed on the taxpayer. Indeed, for
certain taxpayers, record-keeping costs, accountant fees, attorney fees, etc., can be quite
substantial.
Difficulty: 3 Hard
Bloom's: Apply
45
99) Jonah, a single taxpayer, earns $150,000 in taxable income and $10,000 in interest from an
investment in city of Denver bonds. Using the U.S. tax rate schedule for year 2019, how much
federal tax will he owe? What is his average tax rate? What is his effective tax rate? What is his
current marginal tax rate? If Jonah earned an additional $40,000 of taxable income, what is his
marginal tax rate on this income? (Round the tax rates to two decimal places, e.g., .12345 as
12.35 percent.) (Use tax rate schedule.)
Answer: Jonah will owe $30,175 in federal income tax this year computed as follows:
$30,175 = $14,382.50 + (24% × ($150,000 − $84,200)).
Jonah's average tax rate is 20.12 percent.
Average Tax Rate = Total Tax/Taxable Income = $30,175 / $150,000 = 20.12%
Jonah's effective tax rate is 18.86 percent.
Effective Tax Rate = Total Tax / Total Income = $30,175 / ($150,000 + $10,000) = 18.86%
Jonah is currently in the 24 percent tax rate bracket. His marginal tax rate on small increases in
income and deductions is 24 percent.
If Jonah earns an additional $40,000 of taxable income, his marginal tax rate on the income is
29.86 percent.
Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($42,117 − $30,175) /

($190,000 − $150,000) = 29.86%.
Difficulty: 3 Hard
Bloom's: Apply
46
100) Heather, a single taxpayer who files as a head of household, earns $60,000 in taxable
income and $5,000 in interest from an investment in city of Oxford bonds. Using the U.S. tax
rate schedule for year 2019, how much federal tax will she owe? What is her average tax rate?
What is her effective tax rate? What is her current marginal tax rate? If Heather has an additional
$20,000 of tax deductions, what is her marginal tax rate on these deductions? (Round the tax
rates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax rate schedule).
Answer: Heather will owe $7,638 in federal income tax this year, computed as follows:
$7,638 = $6,065 + (22% × ($60,000 − $52,850)).
Heather's average tax rate is 12.73 percent.

Average Tax Rate = Total Tax/Taxable Income = $7,638 / $60,000 = 12.73%.
Heather's effective tax rate is 11.75 percent.

Effective Tax Rate = Total Tax/Total Income = $7,638 / ($60,000 + $5,000) = 11.75%.
Heather is currently in the 22 percent tax rate bracket. Her marginal tax rate on small increases in
income and deductions is 22 percent.
If Heather has an additional $20,000 of tax deductions, her marginal tax rate on the deductions is
16.10 percent.
Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($4,523 − $7,638) / ($40,000
− $60,000) = 15.58%.
Difficulty: 3 Hard
Bloom's: Apply
47
101) Fred and Wilma, married taxpayers, earn $100,000 in taxable income and $20,000 in
interest from an investment in city of Bedrock bonds. Using the U.S. tax rate schedule for
married filing jointly for year 2019, how much federal tax will they owe? What is their average
tax rate? What is their effective tax rate? What is their current marginal tax rate? If Fred and
Wilma earn an additional $40,000 of taxable income, what is their marginal tax rate on this
income? (Round the tax rates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax
rate schedule.)
Answer: Fred and Wilma will owe $13,879 in federal income tax this year, computed as
follows:
$13,717 = $9,086 + (22% × ($100,000 − $78,950)).
Fred and Wilma's average tax rate is 13.72 percent.

Fred and Wilma's effective tax rate is 11.43 percent.

Effective Tax Rate = Total Tax/Total Income = $13,717 / ($100,000 + $20,000) = 11.43%
Fred and Wilma are currently in the 22 percent tax rate bracket. Their marginal tax rate on small
increases in income and deductions is 25 percent.
If Fred and Wilma earn an additional $40,000 of taxable income, their marginal tax rate on the
income is 22.00 percent..
Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($22,517 − $13,717) /

($140,000 − $100,000) = 22.00%
Difficulty: 3 Hard
Bloom's: Apply
48
102) Nick and Jessica are married taxpayers that file married filing separately. Jessica earns
$250,000 of taxable income per year. Nick earns $130,000 of taxable income per year. Using the
appropriate U.S. tax rate schedule for year 2019, how much tax does each of them pay? What are
their marginal and average tax rates? How much tax would they save, if any, if they filed jointly?
(Round the tax rates to two decimal places, e.g., .12345 as 12.35 percent.) (Use tax rate
schedule.)
Answer: Nick would owe $25,375 and Jessica would owe $62,694, computed as follows:
Nick: $25,375 = $14,382.50 + (24% × ($130,000 − $84,200)).
Jessica: $62,694 = $46,628.5 + (35% × ($250,000 − $204,100)).
Nick's average tax rate is 19.52 percent.

Jessica's average tax rate is 25.08 percent.

Nick is in the 24 percent tax rate bracket, and Jessica is in the 35 percent tax rate bracket. Thus,
their marginal tax rates are 24 percent and 35 percent, respectively, on small increases in income
and deductions.
If Nick and Jessica filed jointly, they would owe $84,233 in tax.
$84,233 = $65,497 + (32% × ($380,000 − $321,450)).
Thus, filing jointly would save them $3,836 (($25,375 + $62,694) − $84,233).
Difficulty: 3 Hard
Bloom's: Apply
49
103) Ariel invests $50,000 in a city of Las Vegas bond that pays 5 percent interest. Alternatively,
Ariel could have invested the $50,000 in a bond recently issued by Jittery Joe's, Inc. that pays 8
percent interest with similar non-tax characteristics as the city of Las Vegas bond (e.g., similar
risk). Assume that Ariel's marginal tax rate is 24 percent. What is her after-tax rate of return for
the city of Las Vegas bond? For the Jittery Joe's, Inc. bond? How much explicit tax does Ariel
pay on the city of Las Vegas bond? How much implicit tax does she pay on the city of Las Vegas
bond? How much explicit tax would she have paid on the Jittery Joe's, Inc. bond? Which bond
should she choose?
Answer: Since the city of Las Vegas bond is a tax-exempt bond, Ariel's after-tax rate of
return on the bond is equal to its pretax rate of return (5 percent). Ariel pays no explicit tax
on the interest earned from the city of Las Vegas bond. The Jittery Joe's bond would pay
$4,000 of interest (i.e., 8% × $50,000). Since Ariel's marginal tax rate is 24 percent, she
would have paid $960 of explicit tax (i.e., 25% × $4,000) on the interest earned from the
Jittery Joe's, Inc. bond, and her after-tax rate of return would be 6.08 percent (($4,000
interest − $960 tax) / $50,000 investment). Ariel earns $2,500 of interest on the city of Las
Vegas bond (i.e., 5% × $50,000). A similarly priced taxable bond (i.e., the Jittery Joe's,
Inc. bond) would pay $4,000 of taxable interest (i.e., 8% × $50,000). Ariel pays $1,500 of
implicit tax on the city of Las Vegas bond (i.e., the difference between the pretax interest
earned from a similar taxable bond ($4,000) and the pretax interest earned from the city of
Las Vegas bond ($2,500)). Ariel should choose the Jittery Joe's, Inc. bond because it earns
a higher after-tax rate of return ((($4,000 interest − $960 tax)/$50,000 investment) =
6.08%) than the city of Las Vegas bond (5%).
Difficulty: 3 Hard
Bloom's: Apply
50
104) Nelson has the choice between investing in a city of Fruithurst bond at 4 percent or a J.B.
Ribs, Inc. bond at 6.5 percent. Assuming that both bonds have the same nontax characteristics
and that Nelson has a 40 percent marginal tax rate, in which bond should he invest? What
interest rate offered by J.B. Ribs, Inc. would make Nelson indifferent between investing in the
two bonds?
Answer: Nelson's after-tax rate of return on the tax-exempt city of Fruithurst bond is 4
percent. The J.B. Ribs, Inc. bond pays taxable interest of 6.5 percent. Nelson's after-tax
rate of return on the J.B. Ribs, Inc. bond is 3.9 percent (i.e., 6.5% interest income − (6.5%
× 40%) tax = 3.9%). Nelson should invest in the city of Fruithurst bond.
For Nelson to be indifferent between investing in the two bonds, the J.B. Ribs, Inc. bond
should provide Nelson the same after-tax rate of return as the city of Fruithurst bond (4
percent). To solve for the required pretax rate of return we can use the following formula:
After-tax return = Pretax return × (1 − Marginal Tax Rate).
J.B. Ribs, Inc. needs to offer a 6.67 percent interest rate to generate a 4 percent after-tax return
and make Nelson indifferent between investing in the two bonds.
4% = Pretax return × (1 − 40%);

Pretax return = 4% / (1 − 40%) = 6.67%
Difficulty: 3 Hard
Bloom's: Apply
51
105) Namratha has the choice between investing in a city of Watkinsville bond at 4.5 percent or
a Moe's, Inc. bond at 7 percent. Assuming that both bonds have the same nontax characteristics
and that Namratha has a 32 percent marginal tax rate, in which bond should she invest? What
interest rate offered by Moe's, Inc. would make Namratha indifferent between investing in the
two bonds?
Answer: Namratha's after-tax rate of return on the tax-exempt city of Watkinsville bond
is 4.5 percent. The Moe's, Inc. bond pays taxable interest of 7 percent. Namratha's after-tax
rate of return on the Moe's, Inc. bond is 4.76 percent (i.e., 7% interest income − (7% ×
32%) tax = 4.76%). Namratha should invest in the Moe's, Inc. bond.
For Namratha to be indifferent between investing in the two bonds, the Moe's, Inc. bond
should provide Namratha the same after-tax rate of return as the city of Watkinsville
bond (4.5 percent). To solve for the required pretax rate of return we can use the
following formula: After-tax return = Pretax return × (1 − Marginal Tax Rate).
Moe's, Inc. needs to offer a 6.62 percent interest rate to generate a 4.5 percent after-tax return
and make Namratha indifferent between investing in the two bonds.
4.5% = Pretax return × (1 − 32%);

Pretax return = 4.5%/(1 − 32%) = 6.62%
Difficulty: 3 Hard
Bloom's: Apply
52
106) Given the following tax structure, what is the minimum tax that would need to be assessed
on Lizzy to make the tax progressive with respect to average tax rates? What is the minimum tax
that would need to be assessed on Lizzy to make the tax progressive with respect to effective tax
rates?
Taxpayer Salary Muni-Bond Interest Total Tax

Mort 20,000 5,000 4,000
Lizzy 80,000 30,000 ???
Answer: Mort's average tax rate is 20 percent.
Average Tax Rate = Total Tax = $4,000 = 20%

Total Income $20,000
A 20 percent average tax rate on Lizzy's $80,000 total income would result in $16,000 of tax
(i.e., 20% × $80,000 = $16,000). Thus, Lizzy must pay more than $16,000 in tax for the tax
structure to be progressive with respect to average tax rates.
Mort's effective tax rate is 16 percent.
Effective tax rate = Total Tax = $4,000 = 16%

Total Income ($20,000 + $5,000)
A 16 percent effective tax rate on Lizzy's $110,000 total income would result in $17,600 of tax
(i.e., 16% × $110,000 = $17,600). Thus, Lizzy must pay more than $17,600 in tax for the tax
structure to be progressive with respect to effective tax rates.
Difficulty: 3 Hard
Bloom's: Apply
53
107) Given the following tax structure, what is the minimum tax that would need to be assessed
on Dora to make the tax progressive with respect to average tax rates? What is the minimum tax
that would need to be assessed on Dora to make the tax progressive with respect to effective tax
rates?
Taxpayer Salary Muni-Bond Interest Total Tax

Diego 30,000 10,000 1,500
Dora 50,000 5,000 ???
Answer: Diego's average tax rate is 5 percent.
Average Tax Rate = Total Tax = $1,500 = 5%

Total Income $30,000
A 5 percent average tax rate on Dora's $50,000 total income would result in $2,500 of tax (i.e.,
5% × $50,000 = $2,500). Thus, Dora must pay more than $2,500 in tax for the tax structure to be
progressive with respect to average tax rates.
Diego's effective tax rate is 3.75 percent.
Effective tax rate = Total Tax = $1,500 = 3.75%

Total Income ($30,000 + $10,000)
A 3.75 percent effective tax rate on Dora's $55,000 total income would result in $2,062.50 of tax
(i.e., 3.75% × $55,000 = $2,062.50). Thus, Dora must pay more than $2,062.50 in tax for the tax
structure to be progressive with respect to effective tax rates.
Difficulty: 3 Hard
Bloom's: Apply
54
108) Junior earns $80,000 taxable income as a regional circuit stock car driver and is taxed at an
average rate of 25 percent (i.e., $20,000 of tax). If Congress increases the income tax rate such
that Junior's average tax rate increases from 25 percent to 30 percent, how much more income
tax will he pay assuming that the income effect is larger than the substitution effect? What effect
will this tax rate change have on the tax base and tax collected? What will happen to the
government's tax revenues if Junior chooses to spend more time pursuing his other passions
besides work (e.g., earns only $60,000 in taxable income) in response to the tax rate change?
What is the term that describes this type of reaction to a tax rate increase? (Round your answers
to two decimal places.)
Answer: Under the current income tax, Junior has $60,000 of income after tax. If the income
effect is descriptive and Congress increases tax rates so that Junior's average tax rate is 30
percent, Junior will need to earn $85,714.29 to continue to have $60,000 of income after tax.
After-tax income = Pretax income (1 − tax rate)
$60,000 = Pretax income (1 − 0.30)
Pretax income = $60,000/0.70
Pretax income = $85,714.29
Junior will pay $25,714.29 in tax ($85,714.29 × 0.30). Accordingly, if the income effect is
descriptive, the tax base and the tax collected will increase.
If Junior only earns $60,000 of taxable income, he would pay $18,000 of tax under the
new tax structure (i.e., $60,000 × 0.30). Thus, the government's tax revenues would
decrease by $2,000 (i.e., $18,000 − $20,000). This is an example of the substitution
effect, which may be descriptive for taxpayers with more disposable income who can
afford to earn less and maintain a style of living.
Difficulty: 3 Hard
Bloom's: Apply
55
109) Given the following tax structure, what amount of tax would need to be assessed on Carrie
to make the tax horizontally equitable? What is the minimum tax that Simon should pay to make
the tax structure vertically equitable based on Fantasia's tax rate? This would result in what type
of tax rate structure?
Taxpayer Salary Total Tax

Fantasia 20,000 1,500
Simon 30,000 2,000
Carrie 20,000 ???
Answer: Horizontal equity means that two taxpayers in similar situations pay the same tax.
Thus, to make the tax structure horizontally equitable, Carrie should pay $1,500 in tax.
Fantasia's average tax rate is 7.5 percent.
Average Tax Rate = Total Tax = $1,500 = 7.5%

Taxable Income $20,000
To be vertically equitable with respect to tax rates, Simon should pay a tax rate higher than 7.5
percent. A 7.5 percent tax rate on Simon's $20,000 taxable income would result in $2,250 of tax
(i.e., 7.5% × $20,000 = $2,250). Thus, Simon must pay more than $2,250 in tax for the tax
structure to be vertically equitable (i.e., to generate a tax rate more than 7.5 percent). This would
result in a progressive tax rate structure.
Difficulty: 3 Hard
Bloom's: Apply
56
110) Consider the following tax rate structures. Is it horizontally equitable? Why or why not? Is
it vertically equitable? Why or why not?

Lucy 40,000 $4,500
Ricky 20,000 $4,500
Ethel 40,000 $4,500
Answer: The tax rate schedule is horizontally equitable because those taxpayers in the same
situation (Lucy and Ethel) pay the same tax ($4,500). The tax is not vertically equitable because
the taxpayers with a greater ability to pay (Lucy and Ethel) do not pay more tax, nor do they pay
a higher tax rate than Ricky.
Difficulty: 3 Hard
Bloom's: Apply
AACSB: Analytical Thinking
111) Consider the following tax rate structure. Is it horizontally equitable? Why or why not? Is it
vertically equitable? Why or why not?

Moe 20,000 1,500
Larry 40,000 8,500
Curly 100,000 25,500
Answer: We cannot evaluate whether the tax rate structure is horizontally equitable because we
are unable to determine if taxpayers in similar situations pay the same tax (i.e., the problem does
not give data for two taxpayers with the same income). The tax rate structure would be
considered vertically equitable because taxpayers with higher income pay more tax and at a
higher rate. Specifically, Moe's, Larry's, and Curly's average tax rates are 7.5 percent, 21.25
percent, and 25.5 percent, respectively.
Difficulty: 3 Hard
Bloom's: Apply
57
112) Jed Clampett is expanding his family-run beer distributorship into Georgia or Tennessee.
His parents began the business many years ago and now three generations of Clampetts work in
the family business. Jed will relocate the entire family (his parents, spouse, children, etc.) to
either state after the move. What types of taxes may influence his decision of where to locate his
business? What nontax factors may influence the decision?
Answer: Taxes will affect several aspects of Jed's decision. Jed should consider differences in
Georgia and Tennessee for (1) business taxes (e.g., corporate taxes), (2) individual income taxes,
(3) excise taxes on beer, (4) real estate taxes (business and personal), (5) estate taxes (e.g., for
wealth transfers from his parents), and (6) sales taxes.
Some nontax factors to be considered would include relative competition from other distributors,
differences in beer consumption across states, factors that might influence long-term growth in
the business, differences in costs associated with operating the business (licenses, relative wages,
utilities, etc.), quality of life factors such as the quality of education, crime, recreational
opportunities, etc.
Difficulty: 3 Hard
Topic: Who Cares About Taxes and Why?; Evaluating Alternative Tax Systems
personal, and political decisions.; 01-05 Apply appropriate criteria to evaluate alternative tax
systems.
Bloom's: Apply
58
113) Congress would like to increase tax revenues by 20 percent. Assume that the average
taxpayer in the United States earns $80,000 and pays an average tax rate of 17.5 percent. If the
income effect is larger than the substitution effect, what average tax rate will result in a 20
percent increase in tax revenues? This is an example of what type of forecasting?
Answer: Based on the information above, the average taxpayer pays $14,000 of tax (i.e.,
$80,000 × 17.5%), leaving $66,000 of income after tax. A 20 percent increase in revenues would
mean that the average taxpayer pays $16,800 in tax ($14,000 × 1.20). With this new tax amount,
we can solve for the tax rate that would generate this tax amount.
After-tax income = Pretax income × (1 − tax rate)
After-tax income = Pretax income − (Pretax income × tax rate)
After-tax income = Pretax income − Tax
Substituting information from the problem results in:
$66,000 = Pretax income − $16,800
Pre-tax income = $82,800
We can use the above formula to solve for the new tax rate.
After-tax income = Pretax income × (1 − tax rate)
$66,000 = $82,800 × (1 − tax rate)
Tax rate = $16,800/$82,800 = 20.29%
This is an example of dynamic forecasting.
Difficulty: 3 Hard
Bloom's: Apply
59
Another random document with
no related content on Scribd:
CHAPTER XXV.
A bove the fountain is a building which contains some paintings of

Polygnotus, it is the votive offering of the people of Cnidos, and
is called The Lounge by the people of Delphi, because they used to
assemble there in old times and discuss both serious and trifling
subjects. That there were many such places throughout Greece
Homer has shown in Melantho’s reviling of Odysseus:
“For you will not go to sleep at a smithy or at some lounge, but you
will keep talking here.”[118]
On the right as you enter the building is a painting of the capture of
Ilium and the return of the Greeks. And they are making preparations
for Menelaus’ hoisting sail, and his ship is painted with boys and
sailors all mixed up together on board: and in the middle of the ship
is Phrontis the pilot with two punting poles. Homer[119] has
represented Nestor among other things telling Telemachus about
Phrontis, how he was the son of Onetor, and pilot of Menelaus, and
most able in his art, and how he died as he sailed past Sunium in
Attica. And Menelaus, who was up to this time sailing with Nestor,
was now left behind, that he might discharge all due funeral rites for
Phrontis. Beneath Phrontis in the painting of Polygnotus is
Ithæmenes carrying some garment, and Echœax descending the
gangway-ladder with a brazen water-pot. And Polites and Strophius
and Alphius are represented taking down the tent of Menelaus,
which is not far from the ship. And Amphialus is taking down another
tent, a boy is sitting at his feet, but there is no inscription on him, and
Phrontis is the only person with a beard. His was the only name in
the group that Polygnotus got out of the Odyssey: the others I
imagine he invented. There too stands Briseis, and Diomede near
her, and Iphis in front of them both, they all appear to be gazing at
Helen’s beauty. And Helen is seated, and near her is Eurybates, who
has no beard, and was I suppose the herald of Odysseus. And
Helen’s handmaids are by, Panthalis standing at her side, and
Electra fastening her sandals: these names are different however
from those Homer gives in the Iliad, when he describes Helen and
her maids going on to the walls.[120] And above Helen sits a man
clothed in purple, looking very dejected: before reading the
inscription one would conjecture that it is Helenus the son of Priam.
And near Helenus is Meges, who is wounded in the shoulder, as he
is described by Lescheos of Pyrrha, the son of Æschylinus, in his
Capture of Ilium, he was wounded he says by Admetus the son of
Augeas in the night-attack of the Trojans. And next to Meges is
Lycomedes the son of Creon, who is wounded on the wrist, as
Lescheos says he was by Agenor. It is manifest that Polygnotus
must have read Lescheos’ poem, or he would not have painted their
wounds so accurately. He has also depicted Lycomedes with a third
wound in the ankle, and a fourth on the head. Euryalus also the son
of Mecisteus is represented as wounded in the head and wrist. All
these are above Helen in the painting: and next Helen is Æthra the
mother of Theseus with her head shaven, and Theseus’ son
Demophon apparently wondering whether he could save her. And
the Argives say that Melanippus was the son of Theseus by the
daughter of Sinis, and that he won the prize in the race, when the
Epigoni restored the Nemean games which were originally
introduced by Adrastus. Lescheos has stated that Æthra escaped
when Ilium was taken, and got to the Greek camp, and was
recognized by the sons of Theseus, and Demophon asked her of
Agamemnon. And he said he would willingly gratify Demophon, but
could not do so before he obtained the consent of Helen, so a
messenger was sent to Helen and she gave her consent. I think
therefore the picture represents Eurybates coming to Helen on this
errand, and delivering the message of Agamemnon. And the Trojan
women in the painting look in sad dejection as if they were captives
already. There is Andromache, with a babyboy at her breast.
Lescheos says that this babyboy was hurled from a tower, not in
consequence of any decree of the Greeks, but simply from the
private hatred of Neoptolemus. There too is Medesicaste, one of the
illegitimate daughters of Priam, of whom Homer says that she dwelt
in the town of Pedæum, and married Imbrius the son of Mentor.[121]
Andromache and Medesicaste are represented veiled: but Polyxena
has her hair plaited after the manner of maidens. The Poets
represent her to have been slain at the tomb of Achilles, and I have
seen paintings both at Athens and Pergamus beyond the river
Caicus of her death. Polygnotus has also introduced Nestor into the
same painting, with a hat on his head and a spear in his hand: and a
horse near seems to be rolling in the dust. Near the horse is the sea-
shore, and you can see the pebbles, but the rest of the scene does
not resemble a sea view.
[118] Odyssey, xviii. 328, 329. See Dr. Hayman’s admirable note
on this passage.
[119] Odyssey, iii. 276 sq.
[120] Iliad, iii. 144. Their names there are Æthra and Clymene.
[121] Iliad, xiii. 171-173.
CHAPTER XXVI.
A bove the women between Æthra and Nestor are the captives,
Clymene, and Creusa, and Aristomache, and Xenodice.
Clymene is enumerated among the captives by Stesichorus in his
Fall of Ilium: Aristomache likewise is represented in the poem called
The Return from Ilium as the daughter of Priam, and wife of Critolaus
the son of Hicetaon: but I do not remember either poet or prose-
writer making mention of Xenodice: and as to Creusa, they say that
the Mother of the Gods and Aphrodite rescued her from slavery to
the Greeks, and that she was the wife of Æneas, though Lescheos
and the author of the Cyprian Poems represent Eurydice as the wife
of Æneas. Above these are painted Deinome Metioche Pisis and
Cleodice reclining on a couch: Deinome is the only one of these
mentioned in the poem called The Little Iliad, so I think Polygnotus
must have invented the other names. Here too is Epeus naked
knocking down the walls of Troy, and above the walls is the head
only of the Wooden Horse. Here too is Polypœtes, the son of
Pirithous, with his head bound by a fillet, and near him Acamas, the
son of Theseus, with a helmet on his head, and a crest on the
helmet. Here too is Odysseus with a coat of mail on. And Ajax the
son of Oileus is standing near the altar with a shield in his hand,
taking his oath in connection with the violation of Cassandra:
Cassandra is seated on the ground and holding fast the wooden
statue of Athene, for she tore it from its base, when Ajax dragged her
away from the altar. And the sons of Atreus are painted with their
helmets on: and on Menelaus’ shield is a representation of the
dragon that appeared to him as an omen during the sacrifice at Aulis.
They are administering the oath to Ajax. And near the painting of the
horse by Nestor’s side[122] is Neoptolemus killing Elasus, whoever
he was;[123] his dying agony is well depicted: and Astynous, who is
mentioned by Lescheos, has fallen on to his knee, and Neoptolemus
is in the act of smiting him with the sword. And Polygnotus has
represented Neoptolemus alone of all the Greeks continuing to
butcher the Trojans, that the painting should correspond with the
scenes depicted on the tomb of Neoptolemus. Homer indeed calls
Achilles’ son everywhere by the name of Neoptolemus, but the
Cyprian Poems say he was called Pyrrhus by Lycomedes, and that
the name Neoptolemus was given him by Phœnix, because he[124]
was very young when he first went to the wars. Here too is the
painting of an altar, and a little boy clinging to it in dire fear: a brazen
coat of mail lies on the altar, such as was worn in old times, for in our
days we seldom see such. It consisted of two pieces called Gyala,
one a protection for the breast and belly, the other for the back, both
joined together by clasps. And such coats of mail would afford
sufficient protection without a shield: and so Homer represented
Phorcys the Phrygian without a shield, because he was armed with
this kind of coat of mail.[125] In Polygnotus’ painting I recognize a
coat of mail of this kind: and in the temple of Ephesian Artemis
Calliphon of Samos has painted some women fitting this kind of coat
of mail on Patroclus. And Polygnotus has represented Laodice
standing on the other side of the altar. I do not find her name
mentioned by any poet among the captive Trojan women: and it
seems probable enough that the Greeks let her go. For Homer has
represented in the Iliad that Menelaus and Odysseus were
entertained by Antenor, and that Laodice was the wife of Antenor’s
son Helicaon.[126] And Lescheos states that Helicaon was wounded
in the night-engagement, and recognized by Odysseus, and rescued
out of the battle alive. It follows therefore, from the affection of
Menelaus and Odysseus for the family of Antenor, that Agamemnon
and Menelaus would have offered no violence to Helicaon’s wife.
What Euphorion of Chalcis therefore has written about Laodice is
very improbable. And next Laodice is a stone prop, and a bronze
laver on it. And Medusa sits on the ground holding this prop with
both her hands. Whoever has read the Ode of Himeræus will include
her among the daughters of Priam. And near Medusa is an old
woman closely shaven, (or possibly a eunuch), with a naked child in
his or her arms: the child’s hand is before its eyes for fear.
[122] See ch. 26 nearly at the end.
[123] An Elasus is mentioned in Iliad, xvi. 696.
[124] He (i.e. Neoptolemus). Siebelis very ingeniously suggests ὁ
Ἀχιλλέως. I accept that suggestion as necessary to the sense.
[125] See Iliad, xvii. 314. Pausanias goes a little beyond Homer
methinks.
[126] See Iliad, iii. 205-207. Also 122-124.
CHAPTER XXVII.
O f the dead in the painting are Pelis naked,[127] lying on his back,
and underneath him Eioneus and Admetus both in their coats of
mail. According to Lescheos Eioneus was slain by Neoptolemus, and
Admetus by Philoctetes. And above these are others, near the laver
Leocritus, the son of Polydamas, who was killed by Odysseus, and
near Eioneus and Admetus Corœbus the son of Mygdon. This
Mygdon has a famous tomb on the borders of the Stectorenian
Phrygians, and poets have given those Phrygians the name of
Mygdones after him. Corœbus came to wed Cassandra, and was
killed by Neoptolemus according to the prevalent tradition, but by
Diomede according to Lescheos. And above Corœbus are Priam
and Axion and Agenor. Lescheos says that Priam was not slain at
the altar of Household Zeus, but was torn away from the altar and
killed by Neoptolemus with no great difficulty at the doors of the
palace. As to Hecuba, Stesichorus in his Fall of Ilium has stated that
she was taken to Lycia by Apollo. And Lescheos says that Axion was
the son of Priam, and killed by Eurypylus the son of Euæmon. The
same poet states that Agenor was killed by Neoptolemus. And
Echeclus, Agenor’s son, seems to have been slain by Achilles. And
Sinon, the companion of Odysseus, and Anchialus are carrying out
the corpse of Laomedon for burial. There is another dead person in
the painting, Eresus by name; no poet, so far as my knowledge
goes, has sung either of Eresus or Laomedon. There is a painting
also of the house of Antenor, and a leopard’s skin hung up over the
porch, as a sign to the Greeks not to meddle with the family of
Antenor. And Theano, Antenor’s wife, is painted with her sons,
Glaucus seated on his armour, and Eurymachus seated on a stone.
Near him stands Antenor with his daughter Crino, who is carrying her
baby boy. All these are depicted with sorrowful countenances. The
servants are placing a chest and other articles on the back of an ass,
on which a little boy also sits. And under this painting is the following
Elegiac couplet by Simonides.
“Polygnotus of Thasos, the son of Aglaophon, painted
these incidents in the capture of Ilium.”
[127] Naked here, and in connection with Epeus in ch. 26,
probably only means without armour on. Cf. “Nudus ara, sere
nudus.” Virg. Georg. i. 299.
CHAPTER XXVIII.
T he other part of the painting, that on the left, represents

Odysseus descending to Hades, to consult the soul of Tiresias
about his return home. In the painting is a river, which is obviously
Acheron, and there are some reeds growing in it, and some fishes so
indistinct that they look like the ghosts of fishes. And there is a boat
on the river, and a ferryman with his oars. Polygnotus has followed (I
think) here the description, in the poem called the Minyad, about
Theseus and Pirithous.
“Unwillingly did old Charon admit these living persons into his boat
meant for the use of the dead.”
Polygnotus has accordingly represented Charon as old. The persons
on board are not very easy to trace. But there is Tellis, looking like a
youth, and Cleobœa still a virgin, with a cist on her knees such as
they use in the worship of Demeter. Of Tellis I know nothing more
than that Archilochus was his greatgrandson. And Cleobœa they say
first introduced the mysteries of Demeter from Paros to Thasos. And
on the bank of the Acheron near Charon’s boat a son, who had not
treated his father well, is being strangled by his father. For the
ancients reverenced fathers exceedingly,[128] as one may infer
among other things from the conduct of those called Pious at
Catana, who, when Catana was consumed by fire from Mount Ætna,
took no account of silver or gold, but the one took up his mother, the
other his father, and fled for their lives. And as they advanced with
great difficulty for the flame gathered on them, (but they would not
for all that set their parents down), the flames they say divided so as
to let them pass without hurt. These young men are still honoured at
Catana. And in Polygnotus’ painting near the man who ill-treated his
father, and has consequently a bad time of it in Hades, is a
sacrilegious wretch suffering punishment. The woman[129] who is
punishing him seems well acquainted with poison, and other things
that can do man harm. Men were also in those days remarkable for
piety to the gods, as the Athenians shewed when they captured the
temple of Olympian Zeus at Syracuse, for they removed none of the
votive offerings, and left the former priest still in charge. Datis the
Mede also showed the same piety both in word and in deed, in word
to the Delians, and in deed when, finding a statue of Apollo on a
Phœnician ship, he gave it back to the people of Tanagra to take to
Delium. In those days all men honoured the deity, and so Polygnotus
introduced into his painting the sacrilegious wretch suffering
punishment. Above those I have described is Eurynomus, who
according to the Antiquarians at Delphi is a demon in Hades, and
eats the flesh of the dead clean to the bones. No such person
however is mentioned in the Odyssey, or in the Minyad, or in The
Return from Ilium, though these poems contain accounts of Hades
and its horrors. I shall therefore describe Eurynomus’ appearance in
this painting. His colour is a blueish-black, like that of the flies that
infest meat,[130] and he shows his fangs, and sits on a vulture’s skin.
And next him are Auge and Iphimedea from Arcadia. Auge came to
Teuthras in Mysia, and, of all the women who consorted with
Hercules, bare a son most like him. And Iphimedea is treated with
very great honour by the Carians who dwell at Mylasa.
[128] See for example Hesiod, Works and Days, 331, 332, with
context.
[129] Boettiger takes this woman to be Punishment personified.
[130] Our “bluebottles.”
CHAPTER XXIX.
A bove those I have already mentioned are Perimedes and

Eurylochus,[131] the comrades of Odysseus, with the victims
which are black rams. And next them is a man seated, whom the
inscription states to be Ocnus. He is representing rope-making, and
a she-ass near him eats the rope as fast as he makes it. This Ocnus
they say was an industrious man, who had an extravagant wife: and
whatever he got together by industry was very soon spent by her.
This picture therefore of Polygnotus is supposed to be a skit on
Ocnus’ wife. And I know that the Ionians, when they see anyone
labouring hard to no profit, say that he is weaving Ocnus’ rope.[132]
However those who divine by the flight of birds give the name of
Ocnus to a very rare kind of heron, both large and handsome. Tityus
too is in the picture, no longer being tortured, but worn out by his
continuous punishment to a mere shadow. And if you look at the next
part of the picture, you will see Ariadne very near the man who is
ropemaking: she is sitting on a rock, and looking at her sister
Phædra, who is suspended to a rock by a rope which she holds in
both hands. She is so represented to make her end appear more
decorous. And Dionysus took Ariadne from Theseus either by some
chance, or purposely preparing an ambush for him, sailing against
him with a larger armament. This was the same Dionysus, I take it,
who was the first to invade India, and the first to throw a bridge over
the river Euphrates; the place where he built this bridge was called
Zeugma, and a rope is preserved to this day, wreathed with tendrils
of the vine and ivy, which was used in the construction of the bridge.
Both Greeks and Egyptians have many legends about Dionysus.
And below Phædra Chloris is reclining on the knees of Thyia: no one
will err who states that there was a great friendship between these
two women in their lifetime: and both came from the same
neighbourhood, Orchomenus in Bœotia.[133] There are other
traditions about them, as that Poseidon had an intrigue with Thyia,
and that Chloris was married to Poseidon’s son Neleus. And next
Thyia is Procris the daughter of Erechtheus, and next her, with her
back towards her, is Clymene, who is represented in The Return
from Ilium to have been the daughter of Minyas, and the wife of
Cephalus the son of Deion, and mother by him of Iphiclus. All the
poets agree that Procris was Cephalus’ wife before Clymene was,
and that she was murdered by her husband. And beyond Clymene in
the interior of the painting is the Theban Megara, who was Hercules’
wife, but eventually repudiated by him, because he lost all his
children by her, and so did not think his marriage with her a lucky
one. Above the head of those women I have mentioned is the
daughter of Salmoneus sitting on a stone, and beside her Eriphyle is
standing, lifting her fingers through her dress to her neck. You may
conjecture that she is holding the famous necklace in the hand which
is concealed by the folds of her dress. And above Eriphyle is
Elpenor, and Odysseus kneeling, holding his sword over a ditch: and
Tiresias the prophet is approaching the ditch, and near Tiresias is
Anticlea, the mother of Odysseus, sitting on a stone. And Elpenor is
wearing the coarse plaited coat usual among sea-faring men. And
below Odysseus Theseus and Pirithous are seated on the
enchanted rock, Theseus has both his own sword and that of
Pirithous, and Pirithous is looking at his like one indignant that
swords are useless for their present venture. Panyasis has
represented Theseus and Pirithous as not fastened to their seat, but
that the rock grew to them instead of fetters. The friendship between
Theseus and Pirithous has been alluded to by Homer both in the
Iliad and Odyssey. In the latter Odysseus says to the Phæacians,
“I then perhaps had seen the heroes of former times,
whom I fain would have seen, as Theseus and Pirithous,
the famous sons of the gods.”[134]
And in the Iliad, in his chiding of Agamemnon and Achilles, Nestor
uses the following words:[135]
“I never before saw such heroes nor shall I e’er again, as Pirithous,
and Dryas shepherd of his people, and Cæneus and Exadius and
divine Polyphemus, and Theseus son of Ægeus like to the
Immortals.”
[131] Odyssey, xi. 23 sq.
[132] Propertius has an allusion to this, v. iii. 21, 22.
[133] It will be seen that I adopt the suggestion of Siebelis. The
reading is doubtful.
[134] Odyssey, xi. 630, 631. The last line is in brackets in modern
editions.
[135] Iliad, i. 262-265. The last line here is in brackets in modern
editions.
CHAPTER XXX.
P olygnotus has painted next the daughters of Pandareus, as to

whom Homer says, in a speech of Penelope, that their parents
died through the wrath of the gods when they were still maidens, and
that as they were orphans they were brought up by Aphrodite, and
received gifts from other goddesses, as from Hera prudence and
beauty, from Artemis tallness of stature, from Athene an education fit
for women. But when Aphrodite went up to heaven to obtain a good
match for the girls from Zeus, they were carried off in her absence by
the Harpies and given by them to the Furies. Such at least is
Homer’s account about them.[136] And Polygnotus has painted them
crowned with flowers, and playing with dice. Their names were
Camiro and Clytie. Pandareus was you must know a Milesian from
Cretan Miletus, and an associate of Tantalus both in his theft and
perjury. And next the daughters of Pandareus is Antilochus with one
of his feet on a stone, and his head on both his hands. And next him
is Agamemnon, leaning on his sceptre under his left arm, and with a
staff in his hands. And Protesilaus and Achilles are seated, and
looking at one another. And above Achilles is Patroclus standing.
None of these have beards except Agamemnon. And above them is
painted the stripling Phocus, and Iaseus with a beard, who is trying
to take a ring from Phocus’ left hand. The circumstances are as
follows. When Phocus, the son of Æacus, crossed over from Ægina
to the country now called Phocis, and obtained the sovereignty over
the men in that part of the mainland, and meant to dwell there,
Iaseus was most friendly with him, and offered him various presents,
as was very natural, and among others a stone signet-ring set in
gold: and when Phocus not long after sailed back to Ægina, Peleus
contrived his death: and so in the painting, as a memorial of their
friendship, Iaseus is represented as wishing to look at the signet-
ring, and Phocus letting him take it. Above them is Mæra sitting on a
stone: in The Return from Ilium she is said to have died a virgin, and
to have been the daughter of Prœtus, the son of Thersander and
grandson of Sisyphus. And next Mæra is Actæon, (the son of
Aristæus), and his mother, both seated on a deerskin and holding a
fawn in their hands. And a hound for hunting is near: these are
emblems of the life and death of Actæon. And in the lower part of the
painting next to Patroclus is Orpheus sitting on a hill, with a harp in
his left hand, and with his right hand he is touching the branches of a
willow-tree, and he leans against the tree: the scene looks like the
grove of Proserpine, where Homer tells us poplars and willows grew.
[137] And Orpheus’ dress is Greek, no part of his attire is Thracian,
not even his hat. And Promedon is leaning against the other side of
the willow-tree. Some think Polygnotus introduced Promedon’s name
into legend. Others say he was a Greek who was passionately fond
of music, and especially of that of Orpheus. In the same part of the
painting is Schedius, who led the Phocians to Troy, with a dagger in
his hand, and a garland of grass on his head. And next him sits
Pelias, with beard and head all hoary, gazing at Orpheus. And
Thamyris sitting near Pelias is blind and dejected in mien, with thick
hair and beard, his lyre is broken and the strings torn asunder. Above
him is Marsyas, seated on a stone, and near him Olympus, a
handsome boy, learning to play on the pipe. The Phrygians at
Celænæ represent that the river flowing through their town was
formerly this piper Marsyas, and that the piping in honour of Cybele
was his invention: they say also that they repulsed the army of the
Galati through his aid, as he assisted them both with the water of the
river and his melody.
[136] Odyssey, xx. 63 sq.
[137] Odyssey, x. 509, 510.
CHAPTER XXXI.
I f you look again at the upper part of the painting, you will see next
Actæon Salaminian Ajax Palamedes and Thersites playing with
dice, which were the invention of Palamedes. And the other Ajax is
looking at them playing: he looks like a shipwrecked man, and his
body is wet with the foam of the sea. Polygnotus seems to have
purposely collected together the enemies of Odysseus. And Ajax the
son of Oileus hated Odysseus, because he urged the Greeks to
stone him for his rape of Cassandra. And I have read in the Cyprian
Poems that Palamedes going a fishing was drowned by Diomede
and Odysseus. And a little above Ajax the son of Oileus is Meleager
painted, looking at Ajax. All these except Palamedes have beards.
As to the death of Meleager, Homer informs us that a Fury heard
Althæa cursing him, and that this was the cause of his death. But the
poems called the Great Eœæ and the Minyad agree in stating that
Apollo assisted the Curetes against the Ætolians, and killed
Meleager. As to the famous tradition about the firebrand; how it was
given to Althæa by the Fates, and how Meleager was fated not to die
till it was consumed by fire, and how Althæa set it on fire in a rage,
all this was first described by Phrynichus, the son of Polyphradmon,
in his play called Pleuroniæ:
“He escaped not dread fate, but was consumed by the swift flame,
as soon as the ill-contrived firebrand was set on fire by his stern
mother.”
Phrynichus does not however seem to introduce the legend as his
own invention, but only to allude to it as one well-known throughout
Greece.
In the lower part of the painting next Thracian Thamyris sits Hector,
like a man oppressed with sorrow, with both his hands on his left
knee. And next him is Memnon seated on a stone, and close to
Memnon Sarpedon, who is leaning his head on both his hands, and
one of Memnon’s hands is on Sarpedon’s shoulder. All of these have
beards, and some birds are painted on Memnon’s cloak. These birds
are called Memnonides, and every year the people near the
Hellespont say they come on certain days to Memnon’s tomb, and
sweep all the parts round the tomb that are bare of trees or grass,
and sprinkle them with their wings which they wet in the river
Æsepus. And near Memnon is a naked Ethiopian boy, for Memnon
was king of the Ethiopians. However he did not come to Ilium from
Ethiopia, but from Susa in Persia and the river Choaspes, after
vanquishing all the tribes in that neighbourhood. The Phrygians still
shew the road by which he marched his army, the shortest route
over the mountains.[138]
Above Sarpedon and Memnon is Paris, as yet a beardless youth. He
is clapping his hands like a rustic, apparently to attract the notice of
Penthesilea, who looks at him, but by the toss of her head seems to
despise him, and jeer at him as a boy. She is represented as a
maiden with a Scythian bow, and a leopard’s skin round her
shoulders. Above her are two women carrying water in broken
pitchers, one still in her prime, the other rather advanced in life.
There is no inscription on either of them, except a notification that
they are both among the uninitiated. Above this pair are Callisto the
daughter of Lycaon, and Nomia, and Pero the daughter of Neleus,
from every suitor of whom her father asked the kine of Iphiclus.[139]
Callisto has a bear-skin for her coverlet, and her feet are on the
knees of Nomia. I have before stated that the Arcadians consider
Nomia one of their local Nymphs. The poets say the Nymphs are
long-lived but not immortal. Next to Callisto and the other women
with her is a hill, up which Sisyphus the son of Æolus is laboriously
rolling a stone. There is also a winejar in the painting, and an old
man, and a boy, and two women, a young woman under a rock, and
an old woman near the old man. Some men are bringing water, and
the old woman’s water-pot appears to be broken, and she is pouring
all the water in the pitcher into the winejar. One is inclined to
conjecture that they are people making a mock of the Eleusinian
mysteries. But the older Greeks considered the Eleusinian mysteries
as much above all other religious services, as the gods are superior
to heroes. And under the winejar is Tantalus, undergoing all those
punishments mentioned by Homer,[140] and also terrified lest a stone
overhanging his head should fall on him. It is plain that Polygnotus
followed the account of Archilochus: but I do not know whether
Archilochus invented the addition to the legend about the stone, or
merely related what he had heard from others.
Such is a full account of the various details in this fine painting of the
Thasian painter.
[138] So Corayus. The meaning and reading is very obscure.
[139] See Homer’s Odyssey, xi. 287 sq. Neleus refused the
matchless Pero’s hand to any suitor who would not bring as a
wedding-present these kine of Iphiclus.
[140] Odyssey, xi. 582-592.
CHAPTER XXXII.
N ear the temple precincts is a handsome theatre. And as you

ascend from the precincts you see a statue of Dionysus, the
offering of the men of Cnidos. In the highest part of the city is a
stadium made of the stone of Mount Parnassus, till the Athenian
Herodes embellished it with Pentelican marble. I have now
enumerated the most remarkable things still to be seen at Delphi.
About 60 stades from Delphi on the road to Mount Parnassus is a
brazen statue, and from thence it is an easy ascent for an active
man, or for mules and horses to the Corycian cavern. It got its name,
as I pointed out a little back,[141] from the Nymph Corycia, and of all
the caverns I have seen is best worth a visit. The various caverns on
sea-coasts are so numerous that one could not easily enumerate
them: but the most remarkable whether in Greece or in foreign lands
are the following. The Phrygians near the river Pencala, who
originally came from Arcadia and the Azanes, show a round and lofty
cavern called Steunos, which is sacred to the Mother of the Gods,
and contains her statue. The Phrygians also, who dwell at
Themisonium above Laodicea, say that when the army of the Galati
harried Ionia and the neighbouring districts, Hercules and Apollo and
Hermes came to their aid: and showed their chief men a cavern in a
dream, and bade them hide there their women and children. And so
in front of this cavern they have statuettes of Hercules and Hermes
and Apollo, whom they call The Cavern-Gods. This cavern is about
30 stades from Themisonium, and has springs of water in it, there is
no direct road to it, nor does the light of the sun penetrate into it, and
the roof in most of the cavern is very near the ground. The
Magnesians also at a place called Hylæ near the river Lethæus have
a cavern sacred to Apollo, not very wonderful for size, but containing
a very ancient statue of Apollo, which supplies strength for any
action. Men made holy by the god leap down rocks and precipices
unhurt, and tear up huge trees by the roots, and carry them with
ease through mountain passes. But the Corycian cavern excels both
of these, and through most of it you can walk without needing
torches: and the roof is a good height from the ground, and water
bubbles up from springs, but still more oozes from the roof, so that
there are droppings from the roof all over the floor of the cavern. And
those that dwell on Mount Parnassus consider it sacred to Pan and
the Corycian Nymphs. It is a feat even for an active man to scale the
heights of Parnassus from it, for they are higher than the clouds, and
on them the Thyiades carry on their mad revels in honour of
Dionysus and Apollo.
Tithorea is about 80 stades from Delphi viâ Mount Parnassus, but
the carriage road by a way less mountainous is many stades longer.
Bacis in his oracles and Herodotus in his account of the invasion of
Greece by the Medes differ as to the name of the town. For Bacis
calls the town Tithorea, but Herodotus calls it Neon, and gives the
name Tithorea to the summit of Parnassus, where he describes the
people of the town fleeing on the approach of the Medes. It seems
probable therefore that Tithorea was originally the name for the
entire district, but as time went on the people, flocking into the town
from the villages, called it Tithorea and no longer Neon. And the
people of the place say it got its name from the Nymph Tithorea, one
of those Nymphs who according to the legendary lore of poets were
born of trees and especially oak-trees.[142] A generation before me
the deity changed the fortunes of Tithorea for the worse. There is the
outline of a theatre, and the precincts of an ancient market-place, still
remaining. But the most remarkable things in the town are the grove
and shrine and statue of Athene, and the tomb of Antiope and
Phocus. In my account of the Thebans I have shewn how Antiope
went mad through the anger of Dionysus, and why she drew on her
the anger of the god, and how she married Phocus the son of
Ornytion, of whom she was passionately fond, and how they were
buried together. I also gave the oracle of Bacis both about this tomb
and that of Zethus and Amphion at Thebes. I have mentioned all the
circumstances worth mention about the town. A river called
Cachales flows by the town, and furnishes water to its inhabitants,
who descend to its banks to draw water.
At 70 stades distance from Tithorea is a temple of Æsculapius, who
is called Archegetes, and is greatly honoured both by the Tithoreans

Full Download PDF of Test Bank For McGraw-Hill's Taxation of Individuals 2020 Edition, 11th by Spilker All Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Full Download PDF of Test Bank For McGraw-Hill's Taxation of Individuals 2020 Edition, 11th by Spilker All Chapter

Uploaded by

Copyright:

Available Formats

Test Bank for McGraw-Hill’s Taxation of

Individuals 2020 Edition, 11th by Spilker

Solution Manual for McGraw-Hill’s Taxation of

Test Bank for McGraw-Hill’s Taxation of Individuals and

Solution Manual for McGraw-Hill’s Taxation of

Test Bank for McGraw-Hill’s Essentials of Federal

Solution Manual for McGraw-Hill’s Taxation of

McGraw-Hill’s Taxation of Individuals and Business

McGraw-Hill’s Taxation of Business Entities, 2014

Taxation of Individuals 2018 Edition 9th Edition

7) One key characteristic of a tax is that it is a required payment to a governmental agency.

13) A flat tax is an example of a graduated tax system.

25) A common example of an employment-related tax is the Medicare tax.

40) Margaret was issued a $150 speeding ticket. This is:

I. A 1 percent special sales tax for funding local road construction.

42) Which of the following is considered a tax?

44) Sin taxes are:

I. the tax base

56) Which of the following is true?

62) Which of the following statements is true?

64) The substitution effect:

What is Curtis's after-tax rate of return on the city of Athens bond?

a. $2.50 toll paid on the Florida Turnpike

Marginal Tax Rate

Average Tax Rate = Total Tax

Effective Tax Rate = Total Tax

$30,175 = $14,382.50 + (24% × ($150,000 − $84,200)).

Jonah's average tax rate is 20.12 percent.

Average Tax Rate = Total Tax/Taxable Income = $30,175 / $150,000 = 20.12%

Jonah's effective tax rate is 18.86 percent.

Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($42,117 − $30,175) /

Heather's average tax rate is 12.73 percent.

Heather's effective tax rate is 11.75 percent.

Fred and Wilma's average tax rate is 13.72 percent.

Fred and Wilma's effective tax rate is 11.43 percent.

Marginal Tax Rate = Change in Tax/Change in Taxable Income = ($22,517 − $13,717) /

Nick's average tax rate is 19.52 percent.

Jessica's average tax rate is 25.08 percent.

4% = Pretax return × (1 − 40%);

4.5% = Pretax return × (1 − 32%);

Taxpayer Salary Muni-Bond Interest Total Tax

Answer: Mort's average tax rate is 20 percent.

Average Tax Rate = Total Tax = $4,000 = 20%

Mort's effective tax rate is 16 percent.

Effective tax rate = Total Tax = $4,000 = 16%

Taxpayer Salary Muni-Bond Interest Total Tax

Answer: Diego's average tax rate is 5 percent.

Average Tax Rate = Total Tax = $1,500 = 5%

Diego's effective tax rate is 3.75 percent.

Effective tax rate = Total Tax = $1,500 = 3.75%

Taxpayer Salary Total Tax

Fantasia's average tax rate is 7.5 percent.

Average Tax Rate = Total Tax = $1,500 = 7.5%

Taxpayer Salary Total Tax

Taxpayer Salary Total Tax

A bove the fountain is a building which contains some paintings of

T he other part of the painting, that on the left, represents

A bove those I have already mentioned are Perimedes and

P olygnotus has painted next the daughters of Pandareus, as to

N ear the temple precincts is a handsome theatre. And as you

You might also like