Question 1

One advantage of a lump-sum tax over other taxes is that it

Accepted Answer

A)  is both equitable and efficient.
B)  doesn't cause deadweight loss.
C)  would place a larger tax burden on the rich.
D)  would raise more revenues.E) C) and D)
F) B) and D)

Question 2

Today the typical American pays approximately what percent of income in taxes, including all federal, state, and local taxes?

Accepted Answer

A)  5 percent
B)  25 percent
C)  35 percent
D)  50 percentE) A) and B)
F) None of the above

Question 3

The flypaper theory of tax incidence

Accepted Answer

A)  ignores the indirect effects of taxes.
B)  assumes that most taxes should be "stuck on " the rich.
C)  says that once a tax has been imposed, there is little chance of it changing, so in essence people are stuck with it.
D)  suggests that taxes are like flies because they are everywhere and will never go away.E) B) and C)
F) All of the above

Question 4

Some colleges charge all students the same fee for access to campus computing services. Suppose that students differ by how many hours of campus computing services they use. For example, some students print all their papers and assignment in the campus computer labs, while others use their own printers in their apartments. The computing services fee is most like a(n)

Accepted Answer

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

Question 5

When the marginal tax rate exceeds the average tax rate, the tax is

Accepted Answer

A)  proportional.
B)  regressive.
C)  non-egalitarian.
D)  progressive.E) None of the above
F) All of the above

Question 6

Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?

Accepted Answer

A)  20 percent and 15 percent, respectively
B)  20 percent and 14 percent, respectively
C)  10 percent and 15 percent respectively
D)  10 percent and 14 percent respectivelyE) None of the above
F) A) and D)

Question 7

Changing the basis of taxation from income earned to amount spent will

Accepted Answer

A)  necessarily reduce tax revenues.
B)  lower effective interest rates on savings.
C)  distort incentives to earn income.
D)  eliminate disincentives to save.E) A) and D)
F) B) and C)

Question 8

The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest.

Accepted Answer

A)  corporate income taxes, individual income taxes, social insurance taxes
B)  social insurance taxes, individual income taxes, corporate income taxes
C)  individual income taxes, social insurance taxes, corporate income taxes
D)  individual income taxes, corporate income taxes, social insurance taxesE) A) and C)
F) B) and D)

Question 9

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Accepted Answer

A) True 
 B)False

Question 10

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Accepted Answer

A) True 
 B)False

Question 11

Public schools, which educate most students through high school, are paid for primarily by

Accepted Answer

A)  state governments.
B)  local governments.
C)  the federal government.
D)  taxpayers directly.E) A) and B)
F) A) and C)

Question 12

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Accepted Answer

Horizontal equity is the idea that taxpa...

Question 13

In 2009, the lowest quintile of income earners paid about

Accepted Answer

A)  1 percent of income as taxes and paid less than 1 percent of all taxes.
B)  5 percent of income as taxes and paid less than 1 percent of all taxes.
C)  1 percent of income as taxes and paid about 5 percent of all taxes.
D)  5 percent of income as taxes and paid about 5 percent of all taxes.E) All of the above
F) B) and D)

Question 14

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) A) and B)
F) A) and C)

Question 15

The three largest categories of spending by the Federal government in order from first to third would be

Accepted Answer

A)  income security, net interest, and national defense
B)  national defense, net interest, and income security
C)  income security, health, and national defense
D)  health, income security, and national defenseE) B) and C)
F) All of the above

Question 16

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 schedule could be considered a lump-sum tax?

Accepted Answer

A)  Tax Schedule B only
B)  Tax Schedule B and Tax Schedule C
C)  Tax Schedule D only
D)  None of the tax schedules could be considered a lump-sum tax.E) None of the above
F) C) and D)

Question 17

Vertical equity and horizontal equity are associated with

Accepted Answer

A)  the benefits principle of taxation.
B)  the ability-to-pay principle of taxation.
C)  taxes that have no deadweight losses.
D)  falling marginal tax rates.E) None of the above
F) A) and B)

Question 18

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Accepted Answer

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

Question 19

Country A's tax system is more efficient than Country B's tax system if

Accepted Answer

A)  Country A collects less tax revenue than Country B, and the cost to taxpayers is the same in both countries.
B)  Country A collects more tax revenue than Country B, even though the cost to taxpayers is greater in Country A than in Country B.
C)  the same amount of revenue is raised in both countries, but the cost to taxpayers is smaller in Country A than in Country B.
D)  the same amount of revenue is raised in both countries, but the taxes are collected in a shorter amount of time in Country A than in Country B.E) C) and D)
F) B) and C)

Question 20

Table 12-7
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Accepted Answer

A)  12.7%
B)  15.0%
C)  16.1%
D)  16.9%E) None of the above
F) A) and B)

Exam 12: The Design of the Tax System

Vertical equity and horizontal equity are associated with

Correct Answer
verified

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

Correct Answer
verified

Today the typical American pays approximately what percent of income in taxes, including all federal, state, and local taxes?

Correct Answer
verified

The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest.

Correct Answer
verified

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 schedule could be considered a lump-sum tax?

Correct Answer
verified

Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?

Correct Answer
verified

Changing the basis of taxation from income earned to amount spent will

Correct Answer
verified

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Correct Answer
verified

Country A's tax system is more efficient than Country B's tax system if

Correct Answer
verified

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Correct Answer
verified
Horizontal equity is the idea that taxpa...
View Answer

One advantage of a lump-sum tax over other taxes is that it

Correct Answer
verified

In 2009, the lowest quintile of income earners paid about

Correct Answer
verified

The flypaper theory of tax incidence

Correct Answer
verified

When the marginal tax rate exceeds the average tax rate, the tax is

Correct Answer
verified

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Correct Answer
verified

Public schools, which educate most students through high school, are paid for primarily by

Correct Answer
verified

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Correct Answer
verified

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct Answer
verified

Correct Answer
verified

The three largest categories of spending by the Federal government in order from first to third would be

Correct Answer
verified

Exam 12: The Design of the Tax System

Vertical equity and horizontal equity are associated with

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Today the typical American pays approximately what percent of income in taxes, including all federal, state, and local taxes?

Correct AnswerverifiedShow Answer

The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from the largest to the smallest.

Correct AnswerverifiedShow Answer

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 schedule could be considered a lump-sum tax?

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?

Correct AnswerverifiedShow Answer

Changing the basis of taxation from income earned to amount spent will

Correct AnswerverifiedShow Answer

Which tax system requires higher-income taxpayers to pay a higher percentage of their income in taxes?

Correct AnswerverifiedShow Answer

Country A's tax system is more efficient than Country B's tax system if

Correct AnswerverifiedShow Answer

Define horizontal equity and briefly describe some features of the U.S. federal income tax system that may interfere with achieving it.

Correct AnswerverifiedHorizontal equity is the idea that taxpa...View AnswerShow Answer

One advantage of a lump-sum tax over other taxes is that it

Correct AnswerverifiedShow Answer

In 2009, the lowest quintile of income earners paid about

Correct AnswerverifiedShow Answer

The flypaper theory of tax incidence

Correct AnswerverifiedShow Answer

When the marginal tax rate exceeds the average tax rate, the tax is

Correct AnswerverifiedShow Answer

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $80,000 of taxable income in 2009, what was the individual's average tax rate in 2009?

Correct AnswerverifiedShow Answer

Public schools, which educate most students through high school, are paid for primarily by

Correct AnswerverifiedShow Answer

According to the benefits principle, it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Correct AnswerverifiedShow Answer

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The three largest categories of spending by the Federal government in order from first to third would be

Correct AnswerverifiedShow Answer

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Horizontal equity is the idea that taxpa...
View Answer

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