Given the Following Tax Structure, What Amount of Tax Would

question 43

Essay

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? $\begin{array}{lll}Taxpayer&Salary&\text{Total Tax}\\\hline\\\text { Fantasia } & 20,000 & 1,500 \\\text { Simon } & 30,000 & 2,000 \\\text { Carrie } & 20,000 & ? ? ?\end{array}$

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Definitions:

Lower of Cost or Market

An accounting principle requiring companies to value and report their inventory at the lower of the original cost or its current market price.

Inventory Item

An individual product or article that is held in stock by a business for the purpose of resale or production.

Inventory Value

The total cost or market value of all the goods held by a company meant for sale.

Misstatement

A discrepancy in financial documentation that occurs when a financial statement contains deviations from the truth, errors, or omissions.