Question 1

Taxes create deadweight loss when they

Accepted Answer

A)  distort behavior.
B)  cause the price of the product to increase.
C)  don't raise sufficient government revenue.
D)  cannot be computed easily.E) B) and D)
F) All of the above

Question 2

State and local governments

Accepted Answer

A)  use a mix of taxes and fees to generate revenue.
B)  are required by federal mandate to levy income taxes.
C)  are required to tax property at a standard rate set by the federal government.
D)  cannot impose state excise taxes on products that are taxed by the federal government.E) B) and D)
F) All of the above

Question 3

Table 12-7
 
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)  20%
B)  23%
C)  40%
D)  45%E) C) and D)
F) A) and D)

Question 4

Which type of tax is used to finance the Social Security program in the United States?

Accepted Answer

A)  consumption tax
B)  income tax
C)  payroll tax
D)  property taxE) A) and C)
F) All of the above

Question 5

Table 12-3
 
-Refer to Table 12-3.Assume that the price of a weekend ski pass is $38 and that the price reflects the actual unit cost of providing a weekend of skiing.Suppose the government imposes a tax of $15 on skiing,which raises the price of a weekend ski pass to $53.The deadweight loss associated with the tax is

Accepted Answer

A)  $2.
B)  $37.
C)  $52.
D)  $97.E) None of the above
F) C) and D)

Question 6

If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate is 50 percent.

Accepted Answer

A) True 
 B)False

Question 7

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Accepted Answer

A) True 
 B)False

Question 8

Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Accepted Answer

A) True 
 B)False

Question 9

If transfer payments are included when evaluating tax burdens,then the average tax rate of the poorest quintile of taxpayers would be approximately

Accepted Answer

A)  negative 30 percent.
B)  negative 10 percent.
C)  positive 1 percent.
D)  positive 8 percent.E) B) and C)
F) A) and B)

Question 10

Which of the following statements is correct?

Accepted Answer

A)  National defense and Medicare 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) C) and D)

Question 11

If a tax system is designed so that individuals with similar incomes pay similar taxes,the system achieves horizontal equity.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements about state income taxes is correct?

Accepted Answer

A)  Some states do not tax income at all.
B)  If states tax income, they must follow federal guidelines for designing the tax structure.
C)  States are not allowed to have a higher marginal tax rate than the federal marginal tax rate.
D)  All of the above are correct.E) C) and D)
F) All of the above

Question 13

Part of the deadweight loss from taxing labor earnings is that people

Accepted Answer

A)  will work more.
B)  will be reluctant to hire accountants to file their tax returns.
C)  with low tax liabilities will universally be worse off than under some other tax policy.
D)  will work less.E) B) and D)
F) A) and B)

Question 14

Table 12-2
United States Income Tax Rates for a Single Individual, 2002 and 2003.
 
-Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What is his average tax rate in 2002?

Accepted Answer

A)  19.6%
B)  20.5%
C)  21%
D)  28%E) B) and D)
F) A) and B)

Question 15

Table 12-6
 
-Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Accepted Answer

A)  30%
B)  40%
C)  50%
D)  60%E) None of the above
F) B) and C)

Question 16

If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

Accepted Answer

A)  the poor family should pay more in taxes to pay for public education than the rich family.
B)  the rich family should pay more in taxes to pay for public education than the poor family.
C)  the benefits of private school exceed those of public school.
D)  public schools should be financed by property taxes.E) B) and C)
F) None of the above

Question 17

In 2004,total spending per person by the federal government amounted to

Accepted Answer

A)  $4,750.
B)  $5,000.
C)  $6,400.
D)  $7,800.E) B) and C)
F) B) and D)

Question 18

Table 12-2
United States Income Tax Rates for a Single Individual, 2002 and 2003.
 
-Refer to Table 12-2.Surbhi is a single person whose taxable income is $150,000 a year.What is her total tax due in 2002?

Accepted Answer

A)  $22,072
B)  $41,679.50
C)  $43,789.75
D)  $54,000E) A) and B)
F) A) and C)

Question 19

State and local governments

Accepted Answer

A)  are funded entirely by their own tax base.
B)  receive the majority of their tax revenues from corporate income tax.
C)  are generally not responsible for collecting sales taxes.
D)  receive some of their funds from the federal government.E) A) and B)
F) A) and C)

Question 20

Which of the following is a characteristic of a more efficient tax system?

Accepted Answer

A)  The system minimizes deadweight loss.
B)  The system raises the same amount of revenue at a lower cost.
C)  The system minimizes administrative burdens.
D)  All of the above are correct.E) B) and D)
F) A) and B)

Exam 12: The Design of the Tax System

Which of the following is a characteristic of a more efficient tax system?

Correct Answer
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Correct Answer
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If a tax system is designed so that individuals with similar incomes pay similar taxes,the system achieves horizontal equity.

Correct Answer
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Table 12-6 -Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Correct Answer
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Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What is his average tax rate in 2002?

Correct Answer
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Which of the following statements about state income taxes is correct?

Correct Answer
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Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Correct Answer
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Part of the deadweight loss from taxing labor earnings is that people

Correct Answer
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One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Correct Answer
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State and local governments

Correct Answer
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If transfer payments are included when evaluating tax burdens,then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct Answer
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Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Correct Answer
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Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Surbhi is a single person whose taxable income is $150,000 a year.What is her total tax due in 2002?

Correct Answer
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Taxes create deadweight loss when they

Correct Answer
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Which of the following statements is correct?

Correct Answer
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If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate is 50 percent.

Correct Answer
verified

In 2004,total spending per person by the federal government amounted to

Correct Answer
verified

Which type of tax is used to finance the Social Security program in the United States?

Correct Answer
verified

State and local governments

Correct Answer
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If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

Correct Answer
verified

Exam 12: The Design of the Tax System

Which of the following is a characteristic of a more efficient tax system?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a tax system is designed so that individuals with similar incomes pay similar taxes,the system achieves horizontal equity.

Correct AnswerverifiedShow Answer

Table 12-6 -Refer to Table 12-6.What is the average tax rate for a person who makes $130,000?

Correct AnswerverifiedShow Answer

Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What is his average tax rate in 2002?

Correct AnswerverifiedShow Answer

Which of the following statements about state income taxes is correct?

Correct AnswerverifiedShow Answer

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Correct AnswerverifiedShow Answer

Part of the deadweight loss from taxing labor earnings is that people

Correct AnswerverifiedShow Answer

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

If transfer payments are included when evaluating tax burdens,then the average tax rate of the poorest quintile of taxpayers would be approximately

Correct AnswerverifiedShow Answer

Many people consider lump-sum taxes to be unfair to low-income taxpayers.

Correct AnswerverifiedShow Answer

Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Surbhi is a single person whose taxable income is $150,000 a year.What is her total tax due in 2002?

Correct AnswerverifiedShow Answer

Taxes create deadweight loss when they

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If Mary earns $80,000 in taxable income and pays $40,000 in taxes,her marginal tax rate is 50 percent.

Correct AnswerverifiedShow Answer

In 2004,total spending per person by the federal government amounted to

Correct AnswerverifiedShow Answer

Which type of tax is used to finance the Social Security program in the United States?

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school,the benefits principle would suggest that

Correct AnswerverifiedShow Answer

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