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

question 65

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. Cromwell's taxable income, before apportionment, is $3 million. Its sales, payroll, and property information are as follows. $$\begin{array} { | l | r | r | r | } \hline & { X } & { Y } & { \text { Total } } \\\hline \text { Gross receipts/sales } & \$ 575,000 & \$ 100,000 & \$ 675,000 \\\hline \text { Payroll } & 140,000 & 60,000 & 200,000 \\\hline \text { Property } & 600,000 & 150,000 & 750,000 \\\hline\end{array}$$ a. Calculate Origami's apportionment factors, income apportioned to each state, and state tax liability.
b. 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:

Subculture Elitism

The belief or attitude that a certain subculture or group within a broader culture is superior to others, often leading to exclusion and discrimination.

Weak Organizational Culture

Refers to an organizational environment where the values, beliefs, and practices shared among members are minimal or not deeply ingrained.

Inward Focus

An organizational perspective that prioritizes internal processes, values, and concerns over external trends, customer needs, or market changes, which can limit growth and adaptability.

Organizational Socialization

The process by which new employees learn the values, norms, and required behaviors which permit them to participate as members of an organization.