Question 1

Table 12-10 
-Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is

Accepted Answer

A)  13.7%.
B)  15.2%.
C)  21.7%.
D)  28.3%.E) C) and D)
F) All of the above

Question 2

Many economists believe that

Accepted Answer

A)  the corporate income tax satisfies the goal of horizontal equity.
B)  the corporate income tax does not distort the incentives of customers.
C)  the corporate income tax is more efficient than the personal income tax.
D)  workers and customers bear much of the burden of the corporate income tax.E) All of the above
F) B) and C)

Question 3

Table 12-1 
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. What is the value of the surplus that accrues to all four skiers from their weekend trip?

Accepted Answer

A)  $41.
B)  $95.
C)  $144.
D)  $185.E) A) and C)
F) C) and D)

Question 4

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Accepted Answer

A)  The price of cars will rise.
B)  The wages of auto workers will fall.
C)  Owners of car companies (stockholders)  will receive less profit.
D)  Less deadweight loss will occur since corporations are entities and not people who respond to incentives.E) A) and D)
F) B) and D)

Question 5

Table 12-15 
-Refer to Table 12-15. In this tax system which of the following is possible?

Accepted Answer

A)  vertical and horizontal equity
B)  vertical but not horizontal equity
C)  horizontal but not vertical equity
D)  neither horizontal nor vertical equityE) All of the above
F) B) and C)

Question 6

In many cases, tax loopholes are designed by Congress to

Accepted Answer

A)  give special treatment to specific types of behavior.
B)  reduce the overall administrative burden of the tax system.
C)  raise revenues for special projects.
D)  All of the above are correct.E) A) and D)
F) A) and B)

Question 7

Vertical equity and horizontal equity are associated with

Accepted Answer

A)  the benefits principle of taxation.
B)  the ability-to-pay principle of taxation.
C)  taxes that have no deadweight losses.
D)  falling marginal tax rates.E) C) and D)
F) A) and B)

Question 8

If a tax takes a constant fraction of income as income rises, it is

Accepted Answer

A)  regressive.
B)  proportional.
C)  progressive.
D)  based on the ability-to-pay principle.E) A) and D)
F) All of the above

Question 9

​Which of the following is an example of a tax based on the benefits principle?

Accepted Answer

A)  ​An income tax
B)  ​A lump-sum tax assessed on household in town to finance the construction of soccer fields
C)  ​A gasoline tax imposed by a city to be used to upgrade facilities local high school
D)  ​A toll roadE) A) and B)
F) A) and C)

Question 10

Table 12-20
The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. 
-Refer to Table 12-20. Which tax schedules are regressive?

Accepted Answer

A)  Tax Schedule A and Tax Schedule B
B)  Tax Schedule B and Tax Schedule C
C)  Tax Schedule C and Tax Schedule D
D)  None of the Tax Schedules are regressive.E) A) and B)
F) A) and C)

Question 11

Vertical and horizontal equity are widely accepted and applying them to evaluate a tax system is always straightforward.

Accepted Answer

A) True 
 B)False

Question 12

Table 12-11 
-Refer to Table 12-11. If Al has taxable income of $165,000, his average tax rate is

Accepted Answer

A)  26.6%.
B)  26.9%.
C)  27.3%.
D)  28.5%.E) B) and C)
F) All of the above

Question 13

When the government levies a tax on a corporation,

Accepted Answer

A)  all the burden of the tax ultimately falls on the corporation's owners.
B)  the corporation is more like a tax collector than a taxpayer.
C)  output must increase to compensate for reduced profits.
D)  less deadweight loss will occur since corporations are entities and not people who respond to incentives.E) A) and D)
F) A) and C)

Question 14

How can a proportional tax achieve vertical equity?

Accepted Answer

Vertical equity is the idea that taxpaye...

Question 15

Table 12-10 
-Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Accepted Answer

A)  10%.
B)  15%.
C)  25%.
D)  28%.E) All of the above
F) A) and B)

Question 16

A tax system based on the ability-to-pay principle claims that all citizens should

Accepted Answer

A)  pay taxes based on the benefits they receive from government services.
B)  pay the same amount in taxes.
C)  pay taxes based on consumption rather than income.
D)  make an equal sacrifice.E) All of the above
F) B) and C)

Question 17

Tax incidence refers to

Accepted Answer

A)  what product or service the tax is levied on.
B)  who bears the tax burden.
C)  what sector of the economy is most affected by the tax.
D)  the dollar value of the tax revenues.E) B) and C)
F) A) and D)

Question 18

Scenario 12-3
Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice.
-Refer to Scenario 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. Which of the following statements is correct?

Accepted Answer

A)  Roger will bear the full burden of the deadweight loss.
B)  Regina will bear the full burden of the deadweight loss.
C)  Both Regina and Roger will share the burden of the deadweight loss.
D)  There will be no deadweight loss.E) A) and B)
F) A) and C)

Question 19

Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?

Accepted Answer

A)  20 percent and 15 percent, respectively
B)  20 percent and 14 percent, respectively
C)  10 percent and 15 percent respectively
D)  10 percent and 14 percent respectivelyE) B) and C)
F) None of the above

Question 20

If tax revenues from a tax on wine, beer, and hard liquor are used to pay for healthcare expenses related to liver damage, the alcohol tax could be justified using the __________.

Accepted Answer

The answer of If tax revenues from a tax on...

Exam 12: The Design of the Tax System

Table 12-20 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-20. Which tax schedules are regressive?

Correct Answer
verified

A tax system based on the ability-to-pay principle claims that all citizens should

Correct Answer
verified

Vertical equity and horizontal equity are associated with

Correct Answer
verified

Which of the following is an example of a tax based on the benefits principle?

Correct Answer
verified

Vertical and horizontal equity are widely accepted and applying them to evaluate a tax system is always straightforward.

Correct Answer
verified

In many cases, tax loopholes are designed by Congress to

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Correct Answer
verified

Tax incidence refers to

Correct Answer
verified

Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?

Correct Answer
verified

If tax revenues from a tax on wine, beer, and hard liquor are used to pay for healthcare expenses related to liver damage, the alcohol tax could be justified using the __________.

Correct Answer
verified

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Correct Answer
verified

Table 12-15 -Refer to Table 12-15. In this tax system which of the following is possible?

Correct Answer
verified

Correct Answer
verified

When the government levies a tax on a corporation,

Correct Answer
verified

If a tax takes a constant fraction of income as income rises, it is

Correct Answer
verified

How can a proportional tax achieve vertical equity?

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

Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is

Correct Answer
verified

Many economists believe that

Correct Answer
verified

Table 12-11 -Refer to Table 12-11. If Al has taxable income of $165,000, his average tax rate is

Correct Answer
verified

Correct Answer
verified

Exam 12: The Design of the Tax System

Table 12-20 The following table presents the total tax liability for an unmarried taxpayer under four different tax schedules for the income levels shown. -Refer to Table 12-20. Which tax schedules are regressive?

Correct AnswerverifiedShow Answer

A tax system based on the ability-to-pay principle claims that all citizens should

Correct AnswerverifiedShow Answer

Vertical equity and horizontal equity are associated with

Correct AnswerverifiedShow Answer

​Which of the following is an example of a tax based on the benefits principle?

Correct AnswerverifiedShow Answer

Vertical and horizontal equity are widely accepted and applying them to evaluate a tax system is always straightforward.

Correct AnswerverifiedShow Answer

In many cases, tax loopholes are designed by Congress to

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Correct AnswerverifiedShow Answer

Tax incidence refers to

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?

Correct AnswerverifiedShow Answer

If tax revenues from a tax on wine, beer, and hard liquor are used to pay for healthcare expenses related to liver damage, the alcohol tax could be justified using the __________.

Correct AnswerverifiedShow Answer

Which of the following is not a way that a corporate tax on the income of U.S. car companies will affect markets?

Correct AnswerverifiedShow Answer

Table 12-15 -Refer to Table 12-15. In this tax system which of the following is possible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When the government levies a tax on a corporation,

Correct AnswerverifiedShow Answer

If a tax takes a constant fraction of income as income rises, it is

Correct AnswerverifiedShow Answer

How can a proportional tax achieve vertical equity?

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

Table 12-10 -Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is

Correct AnswerverifiedShow Answer

Many economists believe that

Correct AnswerverifiedShow Answer

Table 12-11 -Refer to Table 12-11. If Al has taxable income of $165,000, his average tax rate is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified

Which of the following is an example of a tax based on the benefits principle?

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

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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