Question 1

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Accepted Answer

The marginal tax rate would be 20 percen...

Question 2

Table 12-18
United States Income Tax Rates for a Single Individual, 2009 and 2010. 
-Refer to Table 12-18. What type of tax structure did the United States have in 2009 for single individuals?

Accepted Answer

A)  a proportional tax structure
B)  a regressive tax structure
C)  a progressive tax structure
D)  a lump-sum tax structureE) B) and C)
F) A) and B)

Question 3

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Accepted Answer

A)  the ability-to-pay principle.
B)  the equity principle.
C)  the benefits principle.
D)  regressive.E) A) and D)
F) C) and D)

Question 4

Bert faces a progressive 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. If Bert earns $75,000, what is his average tax rate?

Accepted Answer

A)  20 percent
B)  25 percent
C)  30 percent
D)  36.67 percentE) A) and C)
F) None of the above

Question 5

A lump-sum tax

Accepted Answer

A)  is most frequently used to tax real property.
B)  does not distort incentives.
C)  distorts incentives more than any other type of tax.
D)  is the most fair tax.E) B) and D)
F) A) and B)

Question 6

Table 12-23
The dollar amounts in the last three columns are the taxes owed under the three different tax systems. 
-Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Accepted Answer

A)  Tax System A
B)  Tax System B
C)  Tax System C
D)  All of the systems exhibit vertical equity.E) B) and D)
F) B) and C)

Question 7

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 8

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Accepted Answer

A)  national defense and income security (welfare)  programs
B)  national defense and Medicare
C)  Social Security and public schools
D)  Social Security and MedicareE) A) and C)
F) None of the above

Question 9

Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

Accepted Answer

A) True 
 B)False

Question 10

If New York City imposed a 50 cent tax on soft-drink beverages that contain sugar or high-fructose corn syrup, it would

Accepted Answer

A)  be an excise tax.
B)  be an income tax.
C)  reduce tax revenue.
D)  cause the supply of corn to rise.E) B) and D)
F) C) and D)

Question 11

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Accepted Answer

A)  deadweight losses and administrative burdens.
B)  deadweight losses and frustration with the political system.
C)  administrative burdens and tax-preparation costs.
D)  administrative burdens and the risk of punishment for failure to comply with tax laws.E) A) and D)
F) B) and C)

Question 12

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

Taxes can create deadweight losses because they

Accepted Answer

A)  allow the government to fund private goods.
B)  create administrative burdens as people comply with tax laws.
C)  allow the government to fund public goods.
D)  Both b and c are correct.E) C) and D)
F) B) and D)

Question 15

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $1 on each cigar, and the equilibrium price of a cigar increases to $16. How much tax revenue is collected?

Accepted Answer

A)  $0
B)  $1
C)  $2
D)  $4E) B) and D)
F) B) and C)

Question 16

Corporate profits distributed as dividends are

Accepted Answer

A)  tax free.
B)  taxed once.
C)  taxed twice.
D)  taxed three times.E) All of the above
F) B) and C)

Question 17

The notion that similar taxpayers should pay similar amounts of taxes is known as

Accepted Answer

A)  vertical equity.
B)  the benefits principle.
C)  horizontal equity.
D)  taxpayer efficiency.E) B) and C)
F) None of the above

Question 18

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013. 
-Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What is her marginal tax rate in 2012?

Accepted Answer

A)  15%
B)  28%
C)  31%
D)  36%E) A) and B)
F) None of the above

Question 19

​A lump-sum tax does not produce a deadweight loss.

Accepted Answer

A) True 
 B)False

Question 20

In 2011, the average American paid approximately how much to the federal government in taxes?

Accepted Answer

A)  $2,000
B)  $2,500
C)  $8,000
D)  $10,500E) C) and D)
F) A) and C)

Exam 12: The Design of the Tax System

Corporate profits distributed as dividends are

Correct Answer
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Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What is her marginal tax rate in 2012?

Correct Answer
verified

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Correct Answer
verified

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Correct Answer
verified

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

A lump-sum tax does not produce a deadweight loss.

Correct Answer
verified

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Correct Answer
verified

A lump-sum tax minimizes deadweight loss.

Correct Answer
verified

In 2011, the average American paid approximately how much to the federal government in taxes?

Correct Answer
verified

Table 12-18 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-18. What type of tax structure did the United States have in 2009 for single individuals?

Correct Answer
verified

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Correct Answer
verified

Taxes can create deadweight losses because they

Correct Answer
verified

The notion that similar taxpayers should pay similar amounts of taxes is known as

Correct Answer
verified

Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

Correct Answer
verified

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct Answer
verified
The marginal tax rate would be 20 percen...
View Answer

If New York City imposed a 50 cent tax on soft-drink beverages that contain sugar or high-fructose corn syrup, it would

Correct Answer
verified

Correct Answer
verified

A lump-sum tax

Correct Answer
verified

Exam 12: The Design of the Tax System

Corporate profits distributed as dividends are

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Ruby Sue is a single person whose taxable income is $100,000 a year. What is her marginal tax rate in 2012?

Correct AnswerverifiedShow Answer

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Correct AnswerverifiedShow Answer

Table 12-23 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-23. Which of the three tax systems exhibits vertical equity?

Correct AnswerverifiedShow Answer

In addition to tax payments, the two other primary costs that a tax system inevitably imposes on taxpayers are

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

​A lump-sum tax does not produce a deadweight loss.

Correct AnswerverifiedShow Answer

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Correct AnswerverifiedShow Answer

A lump-sum tax minimizes deadweight loss.

Correct AnswerverifiedShow Answer

In 2011, the average American paid approximately how much to the federal government in taxes?

Correct AnswerverifiedShow Answer

Table 12-18 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-18. What type of tax structure did the United States have in 2009 for single individuals?

Correct AnswerverifiedShow Answer

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Correct AnswerverifiedShow Answer

Taxes can create deadweight losses because they

Correct AnswerverifiedShow Answer

The notion that similar taxpayers should pay similar amounts of taxes is known as

Correct AnswerverifiedShow Answer

Horizontal and vertical equity are the two primary measures of efficiency of a tax system.

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Correct AnswerverifiedThe marginal tax rate would be 20 percen...View AnswerShow Answer

If New York City imposed a 50 cent tax on soft-drink beverages that contain sugar or high-fructose corn syrup, it would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A lump-sum tax

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A lump-sum tax does not produce a deadweight loss.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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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The marginal tax rate would be 20 percen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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