Table 18-3 Table 18-3 Contains Data on Household Spending at Spending

question 89

Multiple Choice

Table 18-3
Table 18-3 contains data on household spending at different income levels.Suppose that a 3 percent tax is levied on all consumption spending.
-Refer to Table 18-3.Calculate the percent of income paid in taxes by a family with $20,000 income and by a family with $24,000 income.

• A)The family with a $20,000 income pays 2.7 percent of its income in consumption taxes and the family with a $24,000 income pays 2.6 percent of its income in consumption taxes.
• B)Each family pays 3 percent of their respective incomes in consumption taxes.
• C)The family with a $20,000 income pays 15 percent of its income in consumption taxes and the family with a $24,000 income pays 33.3 percent of its income in consumption taxes.
• D)There is insufficient information to make these calculations.

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Definitions:

Bankruptcy Estate

The assets and properties of an individual or entity undergoing bankruptcy, encompassing both tangible and intangible possessions.

Voluntary Chapter 7

A legal process initiated by an individual or business to declare bankruptcy, allowing for the liquidation of assets to pay off debts.

Exemption

A provision that allows an individual or entity to be excused from a usual requirement or rule.

Insolvent Debtors

Individuals or entities that are unable to meet their financial obligations or repay their debts.