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Exam 12: The Design of the Tax System

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Question 191

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The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

A) employer-provided pensions.
B) Social Security and Medicare.
C) employer-provided health benefits.
D) job loss and training programs.

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

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Question 192

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The two taxes that together provide the U.S. federal government with almost 80 percent of its revenue are

A) individual income taxes and property taxes.
B) individual income taxes and corporate income taxes.
C) individual income taxes and payroll taxes.
D) sales taxes and payroll taxes.

E) C) and D)
F) B) and D)

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Question 193

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In 2009, the top 1 percent of income earners made about

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 average tax rate for an individual with $49,000 in taxable income?

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

Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000. Calculate the marginal tax rate and the average tax rate for a person who earns $100,000.

If revenue from a gasoline tax is used to build and maintain public roads, the gasoline tax may be justified on the basis of

Government spending is projected to rise over the next few decades. Three of the most important reasons are spending on Social Security, Medicare, and healthcare.

Table 12-20 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 12-20. Which tax schedules are regressive?

Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax B exhibits

Which tax system requires all taxpayers to pay the same percentage of their income in taxes?

From the time of Benjamin Franklin to the present, the percentage of the average American's income that goes to pay taxes has

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Table 12-24 -Refer to Table 12-24. Would the tax system be justified due to the benefits principle?

In 1950 there were approximately 7 working age people for every elderly person; however, in 2050 there will be

Which of the following is not true about government spending on national defense?

The state government requires all persons to pay 5% of their incomes in income tax.This is an example of:

Suppose a state has the following individual income tax structure. The first $20,000 that an individual earns is taxed at 5%. The next $30,000 is taxed at 10%. Any income exceeding $50,000 is taxed at 20%. Based on this tax structure, if a person's income rises from $45,000 to $55,000, his marginal tax rate is:

A family's income tax liability is

If tax revenues from a tax on wine, beer, and hard liquor are used to pay for healthcare expenses related to liver damage, the alcohol tax could be justified using the __________.