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The city of Carina is considering implementing an Alternative Minimum

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The city of Carina is considering implementing an Alternative Minimum [#permalink]

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Difficulty:

  95% (hard)

Question Stats:

50% (02:07) correct 50% (02:06) wrong based on 107 sessions

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The city of Carina is considering implementing an Alternative Minimum Tax (AMT) for taxpayers earning more than 90% of the population, those individuals who earn more than $350,000 annually. Under this tax plan, Carina citizens in the AMT bracket would be exempt from paying taxes on the first $80,000 of their income and be taxed at a flat rate on the income thereafter. People paying the AMT would not be given allowances regular taxpayers are, such as deductions for children, healthcare expenses, or college tuition.

Which of the following would be most important to determine in order to evaluate whether implementing the AMT plan would be profitable for the city of Carina?

A The average dollar value of Carina citizens’ tax payments for the previous year.
B The dollar value of the tax exemptions the top 10% of wage earners in Carina currently take.
C How many children per capita those earning over $350,000 have in Carina, and how many attend college.
D The average revenue generated by cities in that country that charge AMT when such a system is implemented.
E The dollar value that processing the AMT would require, compared to the dollar value that running the current tax system in Carina requires.

This question is quite tricky in term of concepts.
[Reveal] Spoiler: OA

Last edited by chesstitans on 12 Jan 2018, 11:00, edited 2 times in total.

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Re: The city of Carina is considering implementing an Alternative Minimum [#permalink]

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chesstitans

You should put your comment under the spoiler.It starts directly after the last sentence of the question.It kind of takes the fun out.

this one is a very good question .I think pre thinking helps a lot in this kind of questions.

What the question says that a

1.city where pople with earning over 350,000 $ per year are considered top 10% percent.

2.Now the city introduces an alternate tax plan

3.Under that plan.No Tax for the first 80,000$+ a flat percentage (y% as example) on the 270,000$.And suppose in the previous plan,the tax rate on the entire 350,000 $ WAS X%

Now to evaluate whether the plan is profitable or not one has to determine that whether y% of 270,000 $> the x% of 350000$ or not.

Only B talks about the ( x% of 350000$ - y% of 270,000) or The dollar value of the tax exemptions that the top 10% of wage earners in Carina currently take.

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Re: The city of Carina is considering implementing an Alternative Minimum [#permalink]

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chesstitans wrote:
The city of Carina is considering implementing an Alternative Minimum Tax (AMT) for taxpayers earning more than 90% of the population, those individuals who earn more than $350,000 annually. Under this tax plan, Carina citizens in the AMT bracket would be exempt from paying taxes on the first $80,000 of their income and be taxed at a flat rate on the income thereafter. People paying the AMT would not be given allowances regular taxpayers are, such as deductions for children, healthcare expenses, or college tuition.

Which of the following would be most important to determine in order to evaluate whether implementing the AMT plan would be profitable for the city of Carina?

A The average dollar value of Carina citizens’ tax payments for the previous year.
B The dollar value of the tax exemptions the top 10% of wage earners in Carina currently take.
C How many children per capita those earning over $350,000 have in Carina, and how many attend college.
D The average revenue generated by cities in that country that charge AMT when such a system is implemented.
E The dollar value that processing the AMT would require, compared to the dollar value that running the current tax system in Carina requires.

This question is quite tricky in term of concepts.


Option C is just a trap option. We need the full deduction information, so Option B.
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Re: The city of Carina is considering implementing an Alternative Minimum   [#permalink] 13 Jan 2018, 06:21
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The city of Carina is considering implementing an Alternative Minimum

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