All categories

3 years ago

Us federal income tax is progressive by law, but which best explains why is it sometimes regressive in practice?

2 answers:

3 0

I believe the answer is: High-income earners use tax laws to their advantage to reduce their tax rates

High income earners tend to possess financial knowledge or ability to allow experts who understand the full scope of taxation laws and how to recorded the transactions in a way that make it eligible for tax deduction. This makes a lot of high income earners manage to avoid paying taxes even if they manage to obtain a lot of profit.

NikAS [45]3 years ago

3 0

"High-income earners use tax laws to their advantage to reduce their tax rates" is what best explains why the US federal income tax is progressive by law, but it is sometimes regressive in practice. I hope that this is the answer that you were looking for and the answer has actually come to your great help.

You might be interested in

What would likely have the most severe immediate effect on an economy? Multiple Choice A significant drop in exports. The Fed's

madreJ [45]

Answer:

A failure of the financial sector.

Explanation:

Financial sector indicates all banks and non-banking institutions. These sectors are the source of money supply in an economy. If this sector fails to do such work, the economy might face severe money crisis and the effect would be immediate. An example of it is 2007-08 depression in the US economy.

3 0

4 years ago

Wentworth's Five and Dime Store has a cost of equity of 11.4 percent. The company has an aftertax cost of debt of 5 percent, and

Irina-Kira [14]

Answer:

WACC = 6.66 %

Explanation:

Weighted average cost of capital is the average cost of all of the long-term types of finance used by a company weighted according to the that amount of finance used in relation to the total pool of fund

WACC = (Wd×Kd) + (We×Ke)

After-tax cost of debt = Before tax cost of debt× (1-tax rate)

Kd-After-tax cost of debt = 5%

Ke-Cost of equity = 11.4%

Wd-Weight f debt -74%

We-Weight of equity = 26%

WACC = (0.74× 5%) + (0.26 × 11.4%) = 6.66 %

WACC = 6.66 %

8 0

4 years ago

Which of the following is a low-interest loan funded by the U.S. Department of Education?

ki77a [65]

Which of the following is a low-interest loan funded by the U.S. Department of Education?

A. Stafford

The Stafford Loan is a low-interest loan that is offered by the Department of Education. This loan is given to students in college and allows them to be able to afford college tuition. By giving these low-interest loans to students, they are more likely to attend college then if they were paying out of pocket for schooling.

4 0

4 years ago

Read 2 more answers

Which of the following statements is correct?a. A decrease in the size of a tax always decreases the tax revenue raised by that

levacccp [35]

Answer:

A decrease in the size of a tax always decreases the deadweight loss of that tax.

Explanation:

Deadweight loss of tax is defined as the harm that is caused by tax to economic efficiency and prodction. It measures by how much taxes reduces the standard of living of a population.

Deadweight loss is the difference between to tax imposed and the reduction in production level it causes.

A decrease in the size of tax will give more income free to invest in production, therefore the production level will increase. This reduces the deadweight loss.

Effect of tax on deadweight is illustrated in the attached.

4 0

3 years ago

Suppose your firm just issued a 20-year, $1000 par value bond with semiannual coupons. The coupon interest rate is 9%. The bonds

sergiy2304 [10]

Answer:

4.78%

Explanation:

From the question given, we solve the issue

the calculation of he bond price is:

Price of bond = per value * (1- flotation cost)

$1000 * (1- 0.05)

= $950

For the calculation of semi-annual coupon payments,

Semi -annual coupon payment = Par value * Interest/2

$1000 * 0.09/2 = $45

Calculation of semi- annual yield to maturity

Let recall the following

YTM = yield to maturity

C = The semi-annual coupon payment

FV= Face value or par value

PV= Price of a bond

n = Maturity years of the bond

Therefore,

YTM= C + FV - PV/n/ FV + PV/2

which is

$45 + $1000 - $950/40/$1000 + $950 / 2 = 4.78%

4 0

3 years ago