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

As tax laws become more complex,

Accepted Answer

A)  the administrative burden of taxes will increase.
B)  compliance costs are likely to decrease.
C)  the government will collect more in tax revenue.
D)  the amount of tax revenue lost to tax evasion will decrease.E) B) and C)
F) A) and D)

Question 3

Table 12-1 
-Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. How much consumer surplus accrues to Anna and Clem individually?

Accepted Answer

A)  $125 and $20 respectively
B)  $105 and $30 respectively
C)  $85 and $40 respectively
D)  $65 and $50 respectivelyE) A) and D)
F) A) and C)

Question 4

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

Question 5

Which of the following statements is correct?

Accepted Answer

A)  Vertical equity is the idea that taxpayers with similar abilities to pay taxes should pay the same amount.
B)  Horizontal equity is the idea that taxes should be levied on a person according to how well that person can shoulder the burden.
C)  A regressive tax would mean that high-income tax payers pay a larger fraction of their income in taxes than would low-income taxpayers.
D)  A proportional tax would mean that high-income and low-income taxpayers pay the same fraction of income in taxes.E) B) and C)
F) C) and D)

Question 6

Some colleges charge all students the same fee for a weekly dining services meal plan. Suppose that students differ by how much food they consume each week. For example, members of the women's swimming team consume, on average, twice as much food as the average female college student, and the average male college student consumes 20 percent more food than the average female college student. The dining 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 B)
F) A) and C)

Question 7

Alan Greenspan, former Chairman of the Federal Reserve, 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) All of the above
F) B) and C)

Question 8

Table 12-11 
-Refer to Table 12-11. If Bud has taxable income of $78,000, his tax liability is

Accepted Answer

A)  $7,800.
B)  $9,900.
C)  $10,200.
D)  $15,020.E) B) and D)
F) B) and C)

Question 9

Table 12-16 
-Refer to Table 12-16. The tax system is

Accepted Answer

A)  proportional.
B)  regressive.
C)  progressive.
D)  lump sum.E) A) and B)
F) C) and D)

Question 10

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 $3 on each cigar, and the equilibrium price of a cigar increases to $18. Because total consumer surplus has

Accepted Answer

A)  fallen by more than the tax revenue, the tax has a deadweight loss
B)  fallen by less than the tax revenue, the tax has no dead weight loss.
C)  fallen by exactly the amount of the tax revenue, the tax has no deadweight loss.
D)  increased by less than the tax revenue, the tax has a deadweight loss.E) B) and D)
F) A) and C)

Question 11

Table 12-4 
-Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Accepted Answer

A)  25%
B)  28%
C)  40%
D)  60%E) B) and D)
F) C) and D)

Question 12

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Accepted Answer

A)  police services are more frequently used in poor neighborhoods.
B)  the wealthy benefit more from services provided by government than the poor.
C)  the poor are more active in political processes.
D)  the poor receive welfare payments.E) A) and C)
F) A) and B)

Question 13

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 C exhibits

Accepted Answer

A)  horizontal and vertical equity.
B)  horizontal equity but not vertical equity.
C)  vertical equity but not horizontal equity.
D)  neither horizontal nor vertical equity.E) A) and B)
F) A) and C)

Question 14

What are the three categories of the costs of taxes to taxpayers?

Accepted Answer

the tax payment itse...

Question 15

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

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

Question 17

What are the two types of costs that a well-designed tax policy tries to avoid or minimize?

Accepted Answer

A well-designed tax policy aims to avoid...

Question 18

Table 12-22 
-Refer to Table 12-22. A proportional tax is illustrated by tax

Accepted Answer

A)  A.
B)  B.
C)  C.
D)  D.E) A) and B)
F) None of the above

Question 19

Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Accepted Answer

A) True 
 B)False

Question 20

To fully understand the progressivity of government policies, one should only look at the proportion of total income that individuals pay in taxes each year.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

Correct Answer
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Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. How much consumer surplus accrues to Anna and Clem individually?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Correct Answer
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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
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The marginal tax rate would be 20 percen...
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Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

Correct Answer
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Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

Correct Answer
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Table 12-16 -Refer to Table 12-16. The tax system is

Correct Answer
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What are the two types of costs that a well-designed tax policy tries to avoid or minimize?

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Answered by ExamLex AI
A well-designed tax policy aims to avoid...
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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
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Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

Correct Answer
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What are the three categories of the costs of taxes to taxpayers?

Correct Answer
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the tax payment itse...
View Answer

Table 12-11 -Refer to Table 12-11. If Bud has taxable income of $78,000, his tax liability is

Correct Answer
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As tax laws become more complex,

Correct Answer
verified

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

Correct Answer
verified

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 C exhibits

Correct Answer
verified

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

Correct Answer
verified

In 2009, the lowest quintile of income earners paid about

Correct Answer
verified

To fully understand the progressivity of government policies, one should only look at the proportion of total income that individuals pay in taxes each year.

Correct Answer
verified

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

Correct Answer
verified

Exam 12: The Design of the Tax System

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Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. How much consumer surplus accrues to Anna and Clem individually?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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

Table 12-4 -Refer to Table 12-4. What is the marginal tax rate for a person who makes $50,000?

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Table 12-22 -Refer to Table 12-22. A proportional tax is illustrated by tax

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Table 12-16 -Refer to Table 12-16. The tax system is

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What are the two types of costs that a well-designed tax policy tries to avoid or minimize?

Correct AnswerAnswered by ExamLex AIA well-designed tax policy aims to avoid...View AnswerShow 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?

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Horizontal equity refers to a tax system in which individuals with similar incomes pay similar taxes.

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What are the three categories of the costs of taxes to taxpayers?

Correct Answerverifiedthe tax payment itse...View AnswerShow Answer

Table 12-11 -Refer to Table 12-11. If Bud has taxable income of $78,000, his tax liability is

Correct AnswerverifiedShow Answer

As tax laws become more complex,

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The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that

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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 C exhibits

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In 2009, the lowest quintile of income earners paid about

Correct AnswerverifiedShow Answer

To fully understand the progressivity of government policies, one should only look at the proportion of total income that individuals pay in taxes each year.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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The marginal tax rate would be 20 percen...
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Correct Answer
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Correct Answer
Answered by ExamLex AI
A well-designed tax policy aims to avoid...
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the tax payment itse...
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Correct Answer
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