Origami Does Business in States X and Y

question 12

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. 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:

Subscription Service

A business model where customers pay a recurring price at regular intervals for access to a product or service.

Survey

A research method used to collect data from a predefined group of respondents to gain information and insights on various topics of interest.

Average Age

The sum of the ages of all individuals in a group divided by the number of individuals, used to represent the midpoint of age in the group.

Random

Lacking pattern or predictability in events, often used to describe a method for selecting samples in research to avoid bias.