Question 1

​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 B)

Question 2

The U.S. federal government collects about one-half of the taxes in our economy.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is not an administrative burden of our tax system?

Accepted Answer

A)  government resources used to enforce tax laws
B)  keeping tax records throughout the year
C)  paying the taxes owed
D)  time spent in April filling out formsE) All of the above
F) None of the above

Question 4

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Accepted Answer

Social Security and Medicare payments wi...

Question 5

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Accepted Answer

A)  progressive tax.
B)  regressive tax.
C)  distortion-free tax.
D)  proportional tax.E) B) and D)
F) A) and B)

Question 6

Table 12-12 
-Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and Charles would be

Accepted Answer

A)  5 percent and 6.7 percent, respectively.
B)  8 percent and 6 percent, respectively.
C)  12 percent and 9 percent, respectively.
D)  13 percent and 10 percent, respectively.E) All of the above
F) B) and D)

Question 7

Horizontal equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) B) and C)
F) B) and D)

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) None of the above
F) All of the above

Question 10

Vertical equity states that taxpayers with a greater ability to pay taxes should

Accepted Answer

A)  contribute a decreasing proportion of each increment in income to taxes.
B)  contribute a larger amount than those with a lesser ability to pay.
C)  be less subject to administrative burdens of a tax.
D)  be less subject to tax distortions that lead to deadweight losses.E) C) and D)
F) None of the above

Question 11

Horizontal equity in taxation refers to the idea that people

Accepted Answer

A)  in unequal conditions should be treated differently.
B)  in equal conditions should pay equal taxes.
C)  should be taxed according to their ability to pay.
D)  should receive government benefits according to how much they have been taxed.E) B) and C)
F) A) and D)

Question 12

Resources devoted to complying with the tax laws are a type of deadweight loss.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements is correct?

Accepted Answer

A)  Equity is more important than efficiency as a goal of the tax system.
B)  Efficiency is more important than equity as a goal of the tax system.
C)  Both equity and efficiency are important goals of the tax system.
D)  Neither equity nor efficiency is an important goal of the tax system.E) B) and D)
F) A) and B)

Question 14

Lump-sum taxes are rarely used in the real world because

Accepted Answer

A)  while lump-sum taxes have low administrative burdens, they have high deadweight losses.
B)  while lump-sum taxes have low deadweight losses, they have high administrative burdens.
C)  lump-sum taxes are often viewed as unfair because they take the same amount of money from both poor and rich.
D)  lump-sum taxes are very inefficient.E) A) and C)
F) A) and D)

Question 15

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1)  two people with the same total income would pay taxes of the same amount, and 2)  a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following tax systems could achieve both goals?

Accepted Answer

A)  a lump-sum tax
B)  a regressive tax
C)  a progressive tax
D)  a proportional taxE) C) and D)
F) All of the above

Question 16

European countries tend to rely on which type of tax more so than the United States does?

Accepted Answer

A)  an income tax
B)  a lump-sum tax
C)  a value-added tax
D)  a corrective taxE) None of the above
F) B) and C)

Question 17

The concept that people should pay taxes based on the benefits they receive from government services is called

Accepted Answer

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

Question 18

With a lump-sum tax,the average tax rate for high income taxpayers will be

Accepted Answer

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

Question 19

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 D)
F) All of the above

Question 20

Define the average tax rate.

Accepted Answer

The average tax rate...

Exam 12: The Design of the Tax System

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Correct Answer
verified
Social Security and Medicare payments wi...
View Answer

European countries tend to rely on which type of tax more so than the United States does?

Correct Answer
verified

Horizontal equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
verified

Table 12-12 -Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and Charles would be

Correct Answer
verified

The concept that people should pay taxes based on the benefits they receive from government services is called

Correct Answer
verified

Define the average tax rate.

Correct Answer
verified
The average tax rate...
View Answer

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Correct Answer
verified

Which of the following is not an administrative burden of our tax system?

Correct Answer
verified

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

Correct Answer
verified

Horizontal equity in taxation refers to the idea that people

Correct Answer
verified

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

Correct Answer
verified

Resources devoted to complying with the tax laws are a type of deadweight loss.

Correct Answer
verified

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

Correct Answer
verified

Vertical equity states that taxpayers with a greater ability to pay taxes should

Correct Answer
verified

Correct Answer
verified

The U.S. federal government collects about one-half of the taxes in our economy.

Correct Answer
verified

With a lump-sum tax,the average tax rate for high income taxpayers will be

Correct Answer
verified

In order to determine tax incidence, one must

Correct Answer
verified

Lump-sum taxes are rarely used in the real world because

Correct Answer
verified

Exam 12: The Design of the Tax System

Briefly describe some of the demographic trends that are predicted to increase the government's budget deficit.

Correct AnswerverifiedSocial Security and Medicare payments wi...View AnswerShow Answer

European countries tend to rely on which type of tax more so than the United States does?

Correct AnswerverifiedShow Answer

Horizontal equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Table 12-12 -Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and Charles would be

Correct AnswerverifiedShow Answer

The concept that people should pay taxes based on the benefits they receive from government services is called

Correct AnswerverifiedShow Answer

Define the average tax rate.

Correct AnswerverifiedThe average tax rate...View AnswerShow Answer

An income tax in which the average tax rate is the same for all taxpayers would be considered a

Correct AnswerverifiedShow Answer

Which of the following is not an administrative burden of our tax system?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Horizontal equity in taxation refers to the idea that people

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Resources devoted to complying with the tax laws are a type of deadweight loss.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Vertical equity states that taxpayers with a greater ability to pay taxes should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The U.S. federal government collects about one-half of the taxes in our economy.

Correct AnswerverifiedShow Answer

With a lump-sum tax,the average tax rate for high income taxpayers will be

Correct AnswerverifiedShow Answer

In order to determine tax incidence, one must

Correct AnswerverifiedShow Answer

Lump-sum taxes are rarely used in the real world because

Correct AnswerverifiedShow Answer

Correct Answer
verified
Social Security and Medicare payments wi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The average tax rate...
View Answer

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

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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Correct Answer
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