Question 1

In 1789 the percentage of the average American's income that went to pay taxes was about

Accepted Answer

A)   5%. Today it is about 50%.
B)   5%. Today it is about 25%.
C)   50%. Today it is about 33%.
D)   25%. Today it is about 33%.E) None of the above
F) B) and D)

Question 2

What are the two largest categories of federal tax receipts?

Accepted Answer

individual income taxes (43 pe...

Question 3

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Accepted Answer

A)   It would not cause deadweight loss.
B)   It imposes a minimal administrative burden on taxpayers.
C)   It is more equitable.
D)   It is more efficient.E) C) and D)
F) A) and B)

Question 4

The government taxes corporate income on the basis of

Accepted Answer

A)   profit.
B)   the amount the firm receives for the goods or services it sells.
C)   the number of employees.
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 5

Table 12-11 
-Refer to Table 12-11. If Peggy has taxable income of $43,000, her marginal tax rate is

Accepted Answer

A)   16%.
B)   8%.
C)   24%.
D)   34%.E) A) and B)
F) B) and C)

Question 6

By law, all states must have a state income tax.

Accepted Answer

A) True 
 B)False

Question 7

Suppose that the government taxes income in the following fashion: 30 percent of the first $20,000, 50 percent of the next $30,000, and 60 percent of all income over $50,000. Ted earns $40,000, and Robin earns $60,000. Which of the following statements is correct?

Accepted Answer

A)   Ted's marginal tax rate is 60 percent, and his average tax rate is 50 percent.
B)   Ted's marginal tax rate is 50 percent, and his average tax rate is 40 percent.
C)   Robin's marginal tax rate is 50 percent, and her average tax rate is 45 percent.
D)   Robin's marginal tax rate is 60 percent, and her average tax rate is 40 percent.E) All of the above
F) A) and D)

Question 8

If a poor family has three children in public school and a rich family has two children in private school, the ability-to- pay 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) A) and B)

Question 9

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Accepted Answer

A)   an excise tax which conforms to the benefits principle.
B)   an excise tax which violates the benefits principle.
C)   a lump-sum tax which conforms to the benefits principle.
D)   a lump-sum tax which violates the benefits principle.E) C) and D)
F) A) and D)

Question 10

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

Accepted Answer

A)   more than 50 percent.
B)   exactly 50 percent.
C)   higher than her average tax rate.
D)   lower than her average tax rate.E) All of the above
F) A) and B)

Question 11

The largest budgetary expense for a typical state or local government is

Accepted Answer

A)   education.
B)   Medicare.
C)   highways.
D)   income security.E) A) and D)
F) A) and C)

Question 12

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

Accepted Answer

Social Security, une...

Question 13

Table 12-10 
-Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be

Accepted Answer

A)   $4,531.
B)   $4,678.
C)   $4,950.
D)   $8,269.E) B) and D)
F) B) and C)

Question 14

Costas faces a progressive federal income tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. In addition, he must pay 5 percent of his income in state income tax and 15.3 percent of his labor income in federal payroll taxes. Costas earns $70,000 per year in salary and another $20,000 per year in non-labor income. What is his average tax rate, and what is his marginal tax rate on his salary?

Accepted Answer

A)   His average tax rate is 17.19 percent, and the marginal tax rate on his salary is 55 percent.
B)   His average tax rate is 50.23 percent, and the marginal tax rate on his salary is 70.3 percent.
C)   His average tax rate is 53.63 percent, and the marginal tax rate on his salary is 70.3 percent.
D)   His average tax rate is 55.79 percent, and the marginal tax rate on his salary is 70.3 percent.E) A) and B)
F) B) and C)

Question 15

As government debt increases,

Accepted Answer

A)   Congress will reduce spending by an equal proportion.
B)   the government must spend more revenue on interest payments.
C)   a trade-off with government deficits is inevitable.
D)   tax rates must rise to cover the deficit.E) None of the above
F) A) and B)

Question 16

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 taxes.
C)   are generally not responsible for collecting sales taxes.
D)   receive some of their funds from the federal government.E) A) and D)
F) All of the above

Question 17

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Accepted Answer

A lump-sum tax is the most efficient tax...

Question 18

Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

Accepted Answer

A)   a per person budget surplus of $2,109.
B)   a per person budget deficit of $2,109.
C)   horizontal equity.
D)   vertical equity.E) B) and D)
F) B) and C)

Question 19

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 taxable income of $49,000?

Accepted Answer

A)   0%
B)   10%
C)   25%
D)   35%E) B) and C)
F) A) and B)

Question 20

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Accepted Answer

A)   the ability-to-pay principle.
B)   the benefits principle.
C)   efficiency arguments.
D)   regressive tax arguments.E) C) and D)
F) None of the above

Exam 12: The Design of the Tax System

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Correct Answer
verified

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

Correct Answer
verified
Social Security, une...
View Answer

By law, all states must have a state income tax.

Correct Answer
verified

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 taxable income of $49,000?

Correct Answer
verified

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Correct Answer
verified

As government debt increases,

Correct Answer
verified

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

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be

Correct Answer
verified

State and local governments

Correct Answer
verified

Suppose that the government taxes income in the following fashion: 30 percent of the first $20,000, 50 percent of the next $30,000, and 60 percent of all income over $50,000. Ted earns $40,000, and Robin earns $60,000. Which of the following statements is correct?

Correct Answer
verified

Table 12-11 -Refer to Table 12-11. If Peggy has taxable income of $43,000, her marginal tax rate is

Correct Answer
verified

The government taxes corporate income on the basis of

Correct Answer
verified

What are the two largest categories of federal tax receipts?

Correct Answer
verified
individual income taxes (43 pe...
View Answer

The largest budgetary expense for a typical state or local government is

Correct Answer
verified

Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

Correct Answer
verified

Correct Answer
verified

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

Correct Answer
verified

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Correct Answer
verified
A lump-sum tax is the most efficient tax...
View Answer

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Correct Answer
verified

In 1789 the percentage of the average American's income that went to pay taxes was about

Correct Answer
verified

Exam 12: The Design of the Tax System

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

Correct AnswerverifiedShow Answer

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

Correct AnswerverifiedSocial Security, une...View AnswerShow Answer

By law, all states must have a state income tax.

Correct AnswerverifiedShow Answer

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 taxable income of $49,000?

Correct AnswerverifiedShow Answer

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Correct AnswerverifiedShow Answer

As government debt increases,

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be

Correct AnswerverifiedShow Answer

State and local governments

Correct AnswerverifiedShow Answer

Suppose that the government taxes income in the following fashion: 30 percent of the first $20,000, 50 percent of the next $30,000, and 60 percent of all income over $50,000. Ted earns $40,000, and Robin earns $60,000. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Table 12-11 -Refer to Table 12-11. If Peggy has taxable income of $43,000, her marginal tax rate is

Correct AnswerverifiedShow Answer

The government taxes corporate income on the basis of

Correct AnswerverifiedShow Answer

What are the two largest categories of federal tax receipts?

Correct Answerverifiedindividual income taxes (43 pe...View AnswerShow Answer

The largest budgetary expense for a typical state or local government is

Correct AnswerverifiedShow Answer

Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

Correct AnswerverifiedShow Answer

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Correct AnswerverifiedA lump-sum tax is the most efficient tax...View AnswerShow Answer

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

Correct AnswerverifiedShow Answer

In 1789 the percentage of the average American's income that went to pay taxes was about

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Social Security, une...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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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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Correct Answer
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Correct Answer
verified
individual income taxes (43 pe...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A lump-sum tax is the most efficient tax...
View Answer

Correct Answer
verified

Correct Answer
verified