Question 1

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Accepted Answer

A)  higher than the marginal tax rate for low income taxpayers.
B)  the same as the marginal tax rate for low income taxpayers.
C)  lower than the marginal tax rate for low income taxpayers.
D)  Any of the above could be true under a regressive tax system.E) None of the above
F) A) and B)

Question 2

How can a proportional tax achieve vertical equity?

Accepted Answer

Vertical equity is the idea that taxpaye...

Question 3

Table 12-13
The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. 
-Refer to Table 12-13. In this economy Tax A exhibits

Accepted Answer

A)  horizontal and vertical equity.
B)  horizontal equity but not vertical equity.
C)  vertical equity but not horizontal equity.
D)  neither horizontal nor vertical equity.E) B) and D)
F) A) and B)

Question 4

The resources that a taxpayer devotes to complying with the tax laws are a type of

Accepted Answer

A)  consumption tax.
B)  value-added tax.
C)  deadweight loss.
D)  producer surplus.E) A) and C)
F) A) and B)

Question 5

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Accepted Answer

The marginal tax rate would be 30 percen...

Question 6

The "other" category of federal spending consists of many less expensive functions of government, including all of the following except

Accepted Answer

A)  housing credit programs.
B)  farm support programs.
C)  funding for the National Institutes of Health.
D)  the federal court system.E) All of the above
F) A) and B)

Question 7

In order to determine tax incidence, one must

Accepted Answer

A)  consider issues of equity.
B)  also determine the legal liability of the tax.
C)  evaluate where the tax burden eventually falls.
D)  use the "flypaper theory" of taxation.E) A) and C)
F) A) and B)

Question 8

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Accepted Answer

A)  include tax payments as well as transfer payments received.
B)  focus only on the tax payments of wealthy tax payers.
C)  limit their analysis to taxes based on the ability-to-pay principle.
D)  focus their analysis on issues of tax efficiency.E) All of the above
F) None of the above

Question 9

In designing a tax system, policymakers have two objectives that are often conflicting. They are

Accepted Answer

A)  maximizing revenue and minimizing costs to taxpayers.
B)  efficiency and minimizing costs to taxpayers.
C)  efficiency and equity.
D)  maximizing revenue and reducing the national debt.E) A) and C)
F) A) and D)

Question 10

​The largest source of federal revenue in the United States is:

Accepted Answer

A)  ​Social insurance tax
B)  the corporate income tax
C)  ​the individual income tax
D)  Foreign aid to the U.S.E) All of the above
F) A) and D)

Question 11

Table 12-22 
-Refer to Table 12-22. A proportional tax is illustrated by tax

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) None of the above
F) A) and D)

Question 12

Which of the following statements is correct?

Accepted Answer

A)  National defense and health are the two largest spending categories for the federal government.
B)  Welfare programs and highways are the two largest spending categories for state and local governments.
C)  Sales taxes and property taxes are the two most important revenue sources for state and local governments.
D)  Corporate income taxes are the largest source of revenue for the federal government.E) All of the above
F) B) and C)

Question 13

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Accepted Answer

A)  ability-to-pay principle.
B)  benefits principle.
C)  vertical-equity principle.
D)  horizontal-equity principle.E) B) and C)
F) All of the above

Question 14

Table 12-4 
-Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Accepted Answer

A)  25%
B)  28%
C)  40%
D)  60%E) B) and D)
F) None of the above

Question 15

Athos, Porthos,and Aramis each like to take fencing lessons. The price of a fencing lesson is $10. Athos values a fencing lesson at $15, Porthos at $13, and Aramis at $11. Suppose that if the government taxes fencing lessons at 50 cents each, the price rises to $10.50. A consequence of the tax is that consumer surplus shrinks by

Accepted Answer

A)  $1.50 and tax revenues increase by $1.50, so there is no deadweight loss.
B)  $9.00 and tax revenues increase by $1.50, so there is a deadweight loss of $7.50.
C)  $7.50 and tax revenues increase by $7.50, so there is no deadweight loss.
D)  $7.50 and tax revenues increase by $1.50, so there is a deadweight loss of $6.E) A) and D)
F) A) and C)

Question 16

​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Accepted Answer

A) True 
 B)False

Question 17

A tax imposed at every stage of production is a

Accepted Answer

A)  value-added tax.
B)  lump sum tax.
C)  corrective tax.
D)  regressive tax.E) A) and B)
F) C) and D)

Question 18

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Accepted Answer

A)  25 percent
B)  34 percent
C)  50 percent
D)  75 percentE) All of the above
F) A) and D)

Question 19

Goals of efficiency and equity in tax policy are

Accepted Answer

A)  complementary in most countries.
B)  necessary for application of the ability-to-pay principle.
C)  often in conflict with each other.
D)  easier to achieve when tax codes are complex.E) A) and B)
F) A) and D)

Question 20

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Accepted Answer

According to Figure 1, in 1913, the fede...

Exam 12: The Design of the Tax System

The "other" category of federal spending consists of many less expensive functions of government, including all of the following except

Correct Answer
verified

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Correct Answer
verified

Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Correct Answer
verified

In designing a tax system, policymakers have two objectives that are often conflicting. They are

Correct Answer
verified

The largest source of federal revenue in the United States is:

Correct Answer
verified

A tax imposed at every stage of production is a

Correct Answer
verified

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Correct Answer
verified

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Correct Answer
verified

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Correct Answer
verified
According to Figure 1, in 1913, the fede...
View Answer

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Correct Answer
verified

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct Answer
verified
The marginal tax rate would be 30 percen...
View Answer

In order to determine tax incidence, one must

Correct Answer
verified

The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct Answer
verified

How can a proportional tax achieve vertical equity?

Correct Answer
verified
Vertical equity is the idea that taxpaye...
View Answer

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Correct Answer
verified

Correct Answer
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Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax A exhibits

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Goals of efficiency and equity in tax policy are

Correct Answer
verified

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct Answer
verified

Exam 12: The Design of the Tax System

The "other" category of federal spending consists of many less expensive functions of government, including all of the following except

Correct AnswerverifiedShow Answer

Suppose the government levies a "fat tax" on naturally-sweetened carbonated beverages to try to reduce the number of overweight children. If the tax revenues pay for the health problems of overweight children, the tax would satisfy the

Correct AnswerverifiedShow Answer

​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Correct AnswerverifiedShow Answer

In designing a tax system, policymakers have two objectives that are often conflicting. They are

Correct AnswerverifiedShow Answer

​The largest source of federal revenue in the United States is:

Correct AnswerverifiedShow Answer

A tax imposed at every stage of production is a

Correct AnswerverifiedShow Answer

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Correct AnswerverifiedShow Answer

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Correct AnswerverifiedShow Answer

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Correct AnswerverifiedAccording to Figure 1, in 1913, the fede...View AnswerShow Answer

Under a regressive tax system, the marginal tax rate for high income taxpayers is

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct AnswerverifiedThe marginal tax rate would be 30 percen...View AnswerShow Answer

In order to determine tax incidence, one must

Correct AnswerverifiedShow Answer

The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct AnswerverifiedShow Answer

How can a proportional tax achieve vertical equity?

Correct AnswerverifiedVertical equity is the idea that taxpaye...View AnswerShow Answer

For state and local governments, in 2011, education accounted for approximately what percentage of spending?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax A exhibits

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Goals of efficiency and equity in tax policy are

Correct AnswerverifiedShow Answer

Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

Correct Answer
verified

Correct Answer
verified

The largest source of federal revenue in the United States is:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
According to Figure 1, in 1913, the fede...
View Answer

Correct Answer
verified

Correct Answer
verified
The marginal tax rate would be 30 percen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Vertical equity is the idea that taxpaye...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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