Unfortunately, whenever large amounts of money and politics are involved, matters
are never simple. Despite loud political calls to “simplify the tax code,” the fact of the
matter remains that the tax system is incredibly complex, and the prospects for things
getting much simpler any time soon are dim. Given this, it is important for both individu-
als and for businesses to make sure to educate themselves about the specific tax issues
they face, and to take advantage of competent, professional tax advice and assistance,
particularly when special situations apply. While this chapter has provided an introduction
to the basics of taxation in the United States, it is nowhere near a complete treatment of
the subject. Until and unless the tax code is dramatically simplified, its complexity will
continue to provide headaches to individual taxpayers and businesses, and a good living
to accountants and attorneys who specialize in maneuvering through the tax codes for
their clients.Exercises 9.4 411A. Excise Taxes- Suppose that a state charges an excise tax on liquor of $0.32 per 100 milliliters. What would the tax be on a
500-milliliter bottle of gin? A 750-milliliter bottle? - The excise tax on cigarettes is 7 cents per pack in South Carolina. The rate is $2.46 per pack in Rhode Island.
If a pack of cigarettes would cost $2.39 before excise taxes, what would the price be in each of these two
states? - The Republic of Ithuvania charges an import duty of $2,000 (Ithuvanian dollars) plus 12.5% of the market value on
imported automobiles. If Zoltan wants to import a sports car worth $38,450 (Ithuvanian), how much would he pay in
import duties? - Suppose that American citizens visiting Canada are allowed to bring home one case of beer duty free, but must pay
a duty of $8.35 for each additional case. Ted and Sarah spend a weekend in Toronto, and bring home four cases of
Alexander Keith’s India Pale Ale. How much will they pay in import duties? - Suppose that your company imports digital cameras from overseas. The federal government passes a law imposing a
17.5% import duty on all digital camera imports from the Republic of Cascaria. If your company imports a shipment of
$978,350 worth of these cameras from that nation, how much import duty would be owed? - Suppose that the state tax on gasoline is 5% of the wholesale price up to a maximum of 13.5 cents per gallon.
Determine the tax on a 1,600-gallon shipment if the wholesale price is $1.79 per gallon. - Suppose that the state tax on gasoline is 4.75% of the wholesale price up to a maximum of 10 cents per gallon.
Determine the tax on a 1,450-gallon shipment if the wholesale price is $2.39 per gallon.
EXERCISES 9.4
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