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Exam 12: The Design of the Tax System

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Question 31

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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 in both years, which of the following statements is true regarding the individual's marginal tax rate?

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) B) and D)

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Question 32

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Sue earns income of $80,000 per year. Her average tax rate is 30 percent. Sue paid 20 percent in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

A) 20 percent
B) 24 percent
C) 30 percent
D) 36 percent

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

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Question 33

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Individual income taxes generate roughly 25% of the tax revenue for the federal government.

The administrative burden of any tax system is part of the inefficiency it creates.

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2013?

In the United States, the marginal tax rate on individual federal income tax

In 2011, the U.S. federal government collected approximately what percentage of the taxes in the economy?

When the government taxes labor earnings we can expect people to

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

The largest budgetary expense for a typical state or local government is

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is

In which of the following tax systems do taxes increase as income increases?

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 does the United States have in 2010 for single individuals?

Table 12-24 -Refer to Table 12-24. Does the tax system achieve vertical equity?

An efficient tax system is one that imposes small deadweight losses and small administrative burdens.

Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5. -Refer to Scenario 12-2. Suppose the government levies a tax of $1 on each movie ticket and that, as a result, the price of a movie ticket increases to $6.00. If Bob and Lisa both purchase a movie ticket, what is total consumer surplus for Bob and Lisa?

Under a progressive tax system, the marginal tax rate could be equal to the average tax rate only when a taxpayer

Table 12-25 -Refer to Table 12-25. Which plan illustrates a regressive tax?

In practice, the U.S. income tax system is filled with special provisions that alter a family's tax based on its specific circumstances.

Suppose that in 2020 the average citizen's federal tax bill is $11,987, and total federal spending is $12,294 per person. In 2020, the federal government will have