Origami Does Business in States X and Y Calculate Origami's Apportionment Factors, Income Apportioned to Each State, and Uses

question 54

Essay

Origami does business in states X and Y. State X uses an equally-weighted three-factor apportionment formula and has a 4 percent state tax rate. State Y uses an apportionment formula that double-weights the sales factor and has a 6 percent tax rate. Origami's taxable income, before apportionment, is $3 million. Its sales, payroll, and property information are as follows.
$\begin{array}{lrrr}&X&Y&\text { Total }\\\text { Gross receipts/sales } & \$ 575,000 & \$ 100,000 & \$ 675,000 \\\text { Payroll } & 140,000 & 60,000 & 200,000 \\\text { Property } & 600,000 & 150,000 & 750,000\end{array}$ Calculate Origami's apportionment factors, income apportioned to each state, and state tax liability.State Y is considering changing its apportionment formula to a single sales factor. Given its current level of activity, would such a change increase or decrease Origami's state income tax burden? Provide calculations to support your conclusion.

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Definitions:

Marginal Cost

The supplementary cost that comes with the creation of one more unit of a product or service.

Perfectly Competitive

A market structure characterized by a large number of small firms, a homogeneous product, and free entry and exit, leading to price taking behavior.

Total Revenue

The total income received by a company or organization from its normal business activities, usually from the sale of goods and services to customers.

Figure 16-11

This appears to be a reference to a specific figure in a text or document and without further context, it can't be precisely defined.