Question 1

Table 12-1
 
-Refer to Table 12-1.If Damian has $33,000 in taxable income,his average tax rate is

Accepted Answer

A)   13.7%.
B)   14.6%.
C)   15.0%.
D)   15.2%.E) All of the above
F) C) and D)

Question 2

Zoe,Chloe,and Brody each like to read novels.The current bestseller costs $11.Zoe values it at $16,Chloe at $14,and Brody at $12.Suppose that if the government taxes books at $2 each,the selling price will rise to $13.A consequence of the tax is that

Accepted Answer

A)   consumer surplus shrinks by $4 and tax revenues increase by $6,so there is a deadweight loss of $2.
B)   consumer surplus shrinks by $6 and tax revenues increase by $6,so there is no deadweight loss.
C)   consumer surplus shrinks by $5 and tax revenues increase by $6,so there is no deadweight loss.
D)   consumer surplus shrinks by $5 and tax revenues increase by $4,so there is a deadweight loss of $1.E) None of the above
F) All of the above

Question 3

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 33%.
B)   5%.Today it is about 50%.
C)   33%.Today it is about 33%.
D)   33%.Today it is about 50%.E) B) and D)
F) B) and C)

Question 4

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Accepted Answer

A)   In 1902 the government collected about 7 percent of total income.In recent years,it collected about 30 percent of total income.
B)   In 1902 the government collected about 30 percent of total income.In recent years,it collected about 7 percent of total income.
C)   In 1902 the government collected about 7 percent of total income.In recent years,it collected about 7 percent of total income.
D)   In 1902 the government collected about 30 percent of total income.In recent years,it collected about 30 percent of total income.E) All of the above
F) B) and D)

Question 5

Antipoverty programs funded by taxes on the wealthy are sometimes advocated on the basis of the benefits principle.

Accepted Answer

A) True 
 B)False

Question 6

An efficient tax system is one that imposes small

Accepted Answer

A)   deadweight losses and administrative burdens.
B)   marginal rates and deadweight losses.
C)   administrative burdens and transfers of money.
D)   marginal rates and transfers of money.E) All of the above
F) A) and C)

Question 7

A transfer payment is a government payment

Accepted Answer

A)   to companies that provide goods or services to government agencies.
B)   designed to transfer funds from one government agency to another.
C)   which transfers revenue from the federal government to state government.
D)   not made in exchange for a good or service.E) A) and B)
F) B) and C)

Question 8

What are the two largest categories of federal tax receipts?

Accepted Answer

individual income taxes (43 pe...

Question 9

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.For an individual who earned $80,000 in both years,which of the following statements is true regarding the individual's marginal tax rate?

Accepted Answer

A)   The marginal tax rate is higher in 2010 than in 2009.
B)   The marginal tax rate is the same in 2010 as it was in 2009.
C)   The marginal tax rate is lower in 2010 than in 2009.
D)   With a proportional tax,as in 2010,it is not possible to determine the individual's marginal tax rate so it is not possible to compare the marginal tax rates in the two years.E) All of the above
F) None of the above

Question 10

Why do some policymakers support a consumption tax rather than an earnings tax?

Accepted Answer

A)   The average tax rate would be lower under a consumption tax.
B)   A consumption tax would encourage people to save earned income.
C)   A consumption tax would raise more revenues than an income tax.
D)   The marginal tax rate would be higher under an earnings tax.E) All of the above
F) C) and D)

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Suppose that the government taxes income in the following fashion: 20 percent of the first $50,000,40 percent of the next $50,000,and 60 percent of all income over $100,000.Marshall earns $200,000,and Lily earns $600,000.Which of the following statements is correct?

Accepted Answer

A)   Marshall's marginal tax rate is higher than Lily's marginal tax rate.
B)   Marshall's average tax rate is higher than his marginal tax rate.
C)   Lily's average tax rate is higher than her marginal tax rate.
D)   Lily's average tax rate is higher than Marshall's average tax rate.E) None of the above
F) B) and C)

Question 13

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) A) and D)

Question 14

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Accepted Answer

A) True 
 B)False

Question 15

Table 12-11
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 12-11.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) All of the above
F) C) and D)

Question 16

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

Accepted Answer

A) True 
 B)False

Question 17

Table 12-11
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 12-11.Which tax schedules are progressive?

Accepted Answer

A)   Tax Schedule A only
B)   Tax Schedule A and Tax Schedule B
C)   Tax Schedule A,Tax Schedule B,and Tax Schedule C
D)   All four Tax Schedules are progressive.E) A) and B)
F) A) and C)

Question 18

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) None of the above
F) A) and D)

Question 19

Tax evasion is illegal,but tax avoidance is legal.

Accepted Answer

A) True 
 B)False

Question 20

Refer to Table 12-2.Would the tax system be justified due to the benefits principle?

Accepted Answer

Based only on the information ...

Exam 12: The Design of the Tax System

The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.

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Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.For an individual who earned $80,000 in both years,which of the following statements is true regarding the individual's marginal tax rate?

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Tax evasion is illegal,but tax avoidance is legal.

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Table 12-11 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 12-11.Which tax schedules are progressive?

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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

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Suppose that the government taxes income in the following fashion: 20 percent of the first $50,000,40 percent of the next $50,000,and 60 percent of all income over $100,000.Marshall earns $200,000,and Lily earns $600,000.Which of the following statements is correct?

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

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What are the two largest categories of federal tax receipts?

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

Antipoverty programs funded by taxes on the wealthy are sometimes advocated on the basis of the benefits principle.

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

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Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his average tax rate is

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

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An efficient tax system is one that imposes small

Correct AnswerverifiedShow Answer

Why do some policymakers support a consumption tax rather than an earnings tax?

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A transfer payment is a government payment

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Table 12-11 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 12-11.Which tax schedules are regressive?

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Refer to Table 12-2.Would the tax system be justified due to the benefits principle?

Correct AnswerverifiedBased only on the information ...View AnswerShow Answer

Zoe,Chloe,and Brody each like to read novels.The current bestseller costs $11.Zoe values it at $16,Chloe at $14,and Brody at $12.Suppose that if the government taxes books at $2 each,the selling price will rise to $13.A consequence of the tax is that

Correct AnswerverifiedShow Answer

Revenues from social insurance taxes are earmarked to pay for education and welfare.

Correct AnswerverifiedShow Answer

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individual income taxes (43 pe...
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Based only on the information ...
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