Question 1

Refer to Table 12-1.In this tax system which of the following is possible?

Accepted Answer

A)   vertical and horizontal equity
B)   vertical but not horizontal equity
C)   horizontal but not vertical equity
D)   neither horizontal nor vertical equityE) A) and B)
F) All of the above

Question 2

Define the deadweight loss of a tax.

Accepted Answer

The deadweight loss of a tax i...

Question 3

Less economically developed countries such as India and Pakistan usually have low tax burdens.

Accepted Answer

A) True 
 B)False

Question 4

Suppose Tyler values a basketball at $20.Jacqui values a basketball at $25.The pre-tax price of a basketball $10.The government imposes a tax of $5 on each basketball,and the price rises to $15.The deadweight loss from the tax is

Accepted Answer

A)   $25.
B)   $15.
C)   $10.
D)   $0.E) A) and D)
F) B) and D)

Question 5

A person's tax obligation divided by her income is called her

Accepted Answer

A)   marginal social tax rate.
B)   marginal private tax rate.
C)   marginal tax rate.
D)   average tax rate.E) A) and B)
F) None of the above

Question 6

One of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity is determining

Accepted Answer

A)   whether or not a taxpayer falls within the highest income quintile.
B)   the level of transfer payments made to low-income groups.
C)   the source of income for taxpayers.
D)   what differences are relevant to a family's ability to pay.E) B) and C)
F) C) and D)

Question 7

Table 12-1
 
-Refer to Table 12-1.If Damian 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 C)
F) All of the above

Question 8

Table 12-12
United States Income Tax Rates for a Single Individual,2009 and 2010.
 
-Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What happened to his average tax rate between 2009 and 2010?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) All of the above
F) A) and B)

Question 9

The federal healthcare spending program that specifically targets the poor is called

Accepted Answer

A)   Medicaid.
B)   Medicare.
C)   National Institutes of Health.
D)   Blue Cross/Blue Shield.E) B) and D)
F) C) and D)

Question 10

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Accepted Answer

A)   10%
B)   40%
C)   50%
D)   67%E) B) and C)
F) All of the above

Question 11

In designing a tax system,policymakers have two objectives that are often conflicting.They are

Accepted Answer

A)   maximizing revenue and minimizing costs to taxpayers.
B)   efficiency and minimizing costs to taxpayers.
C)   efficiency and equity.
D)   maximizing revenue and reducing the national debt.E) B) and D)
F) B) and C)

Question 12

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 13

Use Table A to complete Table B.

Accepted Answer

The answer of Use Table A to complete Table B.
...

Question 14

An advantage of a consumption tax is that it does not distort the incentive to save.

Accepted Answer

A) True 
 B)False

Question 15

A family's income tax liability is

Accepted Answer

A)   a standard percentage of all income earned.
B)   determined by wage income rather than dividend and interest income.
C)   based on total income.
D)   constant from year to year.E) None of the above
F) C) and D)

Question 16

Tax systems that impose recordkeeping requirements on taxpayers are said to have

Accepted Answer

A)   an auditing burden.
B)   a lower incidence of compliance.
C)   an administrative burden.
D)   a certification requirement.E) B) and D)
F) A) and C)

Question 17

Economist Alan Greenspan discussed the advantages of which kind of tax system,"particularly if one were designing a tax system from scratch"?

Accepted Answer

A)   a progressive tax system
B)   a regressive tax system
C)   a consumption tax
D)   a lump-sum taxE) A) and D)
F) C) and D)

Question 18

Table 12-2
 
-Refer to Table 12-2.The tax system is an example of a __________ tax.

Accepted Answer

regressive;the perce...

Question 19

A tax system based on the ability-to-pay principle claims that all citizens should

Accepted Answer

A)   pay taxes based on the benefits they receive from government services.
B)   pay the same amount in taxes.
C)   pay taxes based on consumption rather than income.
D)   make an equal sacrifice.E) All of the above
F) B) and C)

Question 20

Table 12-9
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income.
 
-Refer to Table 12-9.For this tax schedule,what is the marginal tax rate for an individual with $212,000 in taxable income?

Accepted Answer

A)   0%
B)   1%
C)   2%
D)   45%E) All of the above
F) B) and C)

Exam 12: The Design of the Tax System

Refer to Table 12-1.In this tax system which of the following is possible?

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Table 12-12 United States Income Tax Rates for a Single Individual,2009 and 2010. -Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What happened to his average tax rate between 2009 and 2010?

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Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

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Table 12-9 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-9.For this tax schedule,what is the marginal tax rate for an individual with $212,000 in taxable income?

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A tax system based on the ability-to-pay principle claims that all citizens should

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Less economically developed countries such as India and Pakistan usually have low tax burdens.

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Table 12-2 -Refer to Table 12-2.The tax system is an example of a __________ tax.

Correct Answerverifiedregressive;the perce...View AnswerShow Answer

In designing a tax system,policymakers have two objectives that are often conflicting.They are

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A family's income tax liability is

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Suppose Tyler values a basketball at $20.Jacqui values a basketball at $25.The pre-tax price of a basketball $10.The government imposes a tax of $5 on each basketball,and the price rises to $15.The deadweight loss from the tax is

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One of the most difficult issues associated with trying to structure a tax policy to satisfy horizontal equity is determining

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Damian has $33,000 in taxable income,his tax liability will be

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Define the deadweight loss of a tax.

Correct AnswerverifiedThe deadweight loss of a tax i...View AnswerShow Answer

A person's tax obligation divided by her income is called her

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Use Table A to complete Table B.

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Economist Alan Greenspan discussed the advantages of which kind of tax system,"particularly if one were designing a tax system from scratch"?

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Tax systems that impose recordkeeping requirements on taxpayers are said to have

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The federal healthcare spending program that specifically targets the poor is called

Correct AnswerverifiedShow Answer

An advantage of a consumption tax is that it does not distort the incentive to save.

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The U.S.federal government collects approximately what percentage of the taxes in the economy?

Correct AnswerverifiedShow Answer

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regressive;the perce...
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The deadweight loss of a tax i...
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