4/7/24, 10:17 AM Unit 6 Assignment - Taxation and the Economy

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Due Apr 14 by 11:59pm
Points 70
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Unit 6

Assignment: Taxation and the Economy

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
Objectives
CO1 Identify the Foundations of Economics
CO2 - Analyze the Drivers of Economic Growth


Instructions
How much do you pay Uncle Sam each year? Before you go on to complete the Assignment, consider
taking some time to complete the optional Personal Taxation exercise below, where you will calculate your
annual tax obligation to the federal government. Going through this process will help you tie together some
of the key concepts we’ve considered throughout the course. Remember, you do not have to share your
personal information or findings with your peers or instructor.

Use this Personal Taxation Template (https://herzing.instructure.com/courses/36991/files/9190119?wrap=1)

(https://herzing.instructure.com/courses/36991/files/9190119/download?download_frd=1) [PDF] to complete
the exercise.

In your own words, address the following requirements.

Be sure to exceed a minimum of 100 words for each requirement to ensure thorough depth and detail is
utilized in demonstrating your understanding of the answer.

There are several Tax Credits and Deductions that reduce Tax Liability (the amount of tax you owe the
government), including the Earned Income Tax Credit meant to assist those with lower earned incomes;
credits for Health Care (Net Premium Tax Credit), and Education Credits such as the American Opportunity
Credit or Lifetime Learning Credit to make health care and education more affordable. If you own a home,

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4/7/24, 10:17 AM Unit 6 Assignment - Taxation and the Economy

you may have also been able to deduct your Mortgage Interest from your taxable income, lowering your tax
liability.

Businesses also benefit from various tax credits and deductions. One is the depreciation deduction. For
example, if ABC Construction buys a Caterpillar D10 bulldozer for $1,000,000, making it a depreciable
asset, the IRS will allow ABC, Inc. to depreciate its value for 5 years. ABC, Inc. can deduct $200,000
annually from its taxable income for five years, effectively paying no income tax on $1,000,000 in income
over five years. If ABC’s average tax rate is 30%, it saves $300,000 in taxes over five years!

Remember the Law of Demand and the relationship between Price and Demand. Consider how this tax
deduction affects the cost and thus the demand for depreciable assets and how this affects the economy.

Think about why the government allows these credits and deductions considering the Law of Demand.

1. What are Federal income and Corporate income tax revenues used for by the government?
2. Explain why the government seems to support lowering individual income taxes instead of maximizing
its tax revenue.
3. With the Law of Demand in mind, explain how deducting home mortgage interest from taxable income
benefits the homeowner and discuss why the government allows this benefit even though it means
less tax revenue for the government. Discuss which component of the GDP equation these tax
benefits affect and how.
4. With the Law of Demand and Capital Deepening in mind, explain how a tax credit for education
(which, again, reduces government tax revenue) helps the economy. Discuss which component of the
GDP equation these tax benefits affect and how.
5. Using the business depreciation example above, explain how, even though the government loses
roughly $300,000 in corporate income tax from ABC, Inc., this benefits the economy.


Submit
Submit a Word Document containing your assignment and the following requirements:

100 words per requirement / 500 words total

APA Requirements
1” inch margins
Times New Roman 12 pt font
Double-Spaced
In-text Citations
Title Page
Reference Page and in-text citations

Estimated time to complete: 6 hours

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4/7/24, 10:17 AM Unit 6 Assignment - Taxation and the Economy


Resources
Smart Student. (2020 May 11).
How to format your paper in APA style in 2021 (https://youtu.be/VEqRqSsNDjc)

(https://youtu.be/VEqRqSsNDjc)
[Video]. YouTube. https://youtu.be/VEqRqSsNDjc

EC121 Unit 6 Assignment

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4/7/24, 10:17 AM Unit 6 Assignment - Taxation and the Economy

Criteria Ratings Pts

Content 20 pts 18 pts 16 pts 14 pts 12 pts 0 pts

Level Level 4 Level 3 Level 2 Level 1 No Marks
Demonstrates Demonstrates Begins to Demonstrates a Demonstrates There is
the ability to the ability to demonstrate the limited ability in the ability to no
construct a construct a ability to identifying a explain evidence
clear and problem construct a problem contextual of a
insightful statement, problem statement/thesis factors but defined
problem thesis statement/thesis statement/topic does not statement.
statement/thesis statement/topic statement/topic statement or provide a
statement/topic statement with statement with related defined 20 pts
statement with evidence of evidence of contextual statement.
evidence of all most relevant most relevant factors.
relevant contextual contextual
contextual factors, and factors, but
factors. problem problem
statement is statement is
adequately superficial.
detailed.

Analysis 25 pts 22.5 pts 20 pts 17.5 pts 15 pts 0 pts

Level Level 4 Level 3 Level 2 Level 1 No Marks
Organizes and Organizes and Organizes and Organizes Describes Lists
compares interprets describes evidence, but evidence, evidence,
evidence to evidence to evidence the organization but it is not but it is not
reveal insightful reveal according to is not effective organized organized
25 pts
patterns, patterns, patterns, in revealing and/or is and/or is
differences, or differences, or differences, or patterns, unrelated to unrelated to
similarities similarities similarities differences, or focus. focus.
related to related to related to similarities.
focus. focus. focus.

Writing 15 pts 13.5 pts 12 pts 10.5 pts 9 pts 0 pts 15 pts
Level Level 4 Level 3 Level 2 Level 1 No Marks
The paper The paper The paper e paper exhibits The paper The paper
exhibits an exhibits a good exhibits a basic a limited exhibits little does not
excellent command of command of command of command of demonstrate
command of written English written English written English written command of
written language language language English written
English conventions. conventions. conventions. language English
language The paper has The paper has The paper has conventions. language
conventions. no errors in minor errors in frequent errors The paper conventions.
The paper mechanics or mechanics, in mechanics, has errors in The paper
has no spelling with grammar, or grammar, or mechanics, has multiple
errors in minor spelling that spelling that grammar, or errors in
mechanics, grammatical impact the flow impede the flow spelling that mechanics,
errors that cause the grammar, or

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4/7/24, 10:17 AM Unit 6 Assignment - Taxation and the Economy

Criteria Ratings Pts

grammar, or impair the flow of of reader to spelling that
spelling. of communication. communication. stop and cause the
communication. reread parts reader
of the writing difficulty in
to discern discerning
meaning. the meaning.

APA 10 pts 9 pts 8 pts 7 pts 6 pts 0 pts

Level Level 4 Level 3 Level 2 Level 1 No Marks
The required The required The required The required Several APA There is little
APA elements APA elements APA elements APA elements elements are to no
are all are all are all are not all missing. The evidence of
included with included with included with included errors in APA
correct minor multiple and/or there formatting formatting
formatting, formatting formatting are major demonstrate a and/or there 10 pts
including in- errors, errors, formatting limited are no in-text
text citations including in- including in- errors, understanding of citations
and text citations text citations including in- APA guidelines, and/or
references. and and text citations in-text-citations, references.
references. references. and and references.
references.

Total Points: 70

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