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Exam 12: The Design of the Tax System

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Question 61

Multiple Choice

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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

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) All of the above
F) A) and B)

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Question 62

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Tax evasion is

A) facilitated by legal deductions to taxable income.
B) the same as tax avoidance.
C) recommended by the American Accounting Association.
D) illegal.

E) None of the above
F) A) and B)

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Question 63

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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 B exhibits

Citizens expect the government to provide various goods and services making taxes

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 progressive?

European countries tend to rely more on consumption taxes than does the United States.

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with $212,000 in taxable income?

Table 12-25 -Refer to Table 12-25. Which plan illustrates a regressive tax?

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

In 2010, the co-chairmen of President Obama's deficit reduction commission proposed curtailing or eliminating the mortgage interest deduction that millions of homeowner taxpayers receive every year. Economists who favor the proposal would argue that (i) Too much of the economy's capital stock is tied up in residential housing. (ii) Too little of the economy's capital stock is invested in corporate capital. (iii) The misallocation of resources results in lower productivity and reduced real wages.

If your income is $50,000, your income tax liability is $10,000, and you paid $0.25 in taxes on the last dollar you earned, your

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 schedule could be considered a lump-sum tax?

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Table 12-11 -Refer to Table 12-11. If Bud has taxable income of $78,000, his marginal tax rate is

​A city finances a performing arts center by adding a $2.75 tax to each ticket sold.This is an example of taxation via the benefits principle.

Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her tax liability is

-Refer to Table 12-21. Which of the three tax systems is regressive?

Tax evasion is illegal, but tax avoidance is legal.

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Which of the following is not a cost of taxes to taxpayers?