2. a. Congress has changed tax rates many times, and one example of major change occurred in the summer of 2001, during

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2 A Congress Has Changed Tax Rates Many Times And One Example Of Major Change Occurred In The Summer Of 2001 During 1 (171.19 KiB) Viewed 11 times

2. a. Congress has changed tax rates many times, and one example of major change occurred in the summer of 2001, during the Bush (43) administration. The legislation was officially titled The Economic Growth and Tax Relief Reconciliation Act of 2001. The tables below contrast the tax rates before this legislation (in 2000) and later, in 2009. Calculate the income tax for both 2000 and 2009 using a taxable income of $400,000 and married filing jointly status. Also calculate the overall tax percentage. 2000 Tax Rate 15% 28% 31% 36% 39.6% Married Filing Jointly up to 43,850 up to 105,950 up to 161.450 up to 288,350 over 288,350 2000 Tax Rate 15% 28% Total Income Tax: % of Taxable Income: Tax Computation Married Filing Jointly up to 43,850 up to 105,950 Total Income Tax: % of Taxable Income: 2009 Tax Rate 10% 15% 25% 28% 33% 35% Tax Computation 2009 Tax Rate 10% 15% Married Filing Jointly up to 16,700 b. Now, calculate the income tax for both years 2000 and 2009 based on a taxable income of $50,000 (married filing jointly). up to 67,900 up to 137,050 Between 2000 and 2009 Absolute change of total income tax (in dollars): Relative change of total income (as a percent): Percentage point change in the % of taxable income: up to 208,850 up to 372,950 over 372,950 Total Income Tax: % of Taxable Income: Married Filing Jointly up to 16,700 up to 67,900 Total Income Tax: % of Taxable Income: Tax Computation c. Calculate the absolute and relative change between Total Income Tax for the two incomes ($400,000 and $50,000) between the years 2000 and 2009. Also, calculate the percentage point change in the overall % of taxable income. Taxable Income $400,000 $50,000 Tax Computation d. Comment on the changes in the two tax brackets (2000 vs. 2009). Why do you think one brackets in one income level changed more than the other? Do you think the changes made the tax system fairer or less fair? Defend your opinion. e. On the Internet, search for the current federal income tax brackets (use the current year combined with the keywords "1040 tax tables" and scroll all the way through the tax tables past the $100,000 taxable income to find the bracket structure). Comment on any changes that may have taken place since 2009. If they differ in any substantial way, research why Congress made those changes.