Question 1

Table 12-11
 
-Refer to Table 12-11. If Peggy has taxable income of $43,000, her average tax rate is

Accepted Answer

A)   14.7%.
B)   16.3%.
C)   20.8%.
D)   24.0%.E) B) and D)
F) All of the above

Question 2

Which of the following contributes to the projected rise in government spending on Social Security and Medicare as a percentage of GDP?

Accepted Answer

A)   increasing life expectancies
B)   increasing healthcare costs
C)   increasing fertility rates
D)   Both a and b are correct.E) None of the above
F) B) and D)

Question 3

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 C)
F) A) and B)

Question 4

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) B) and C)
F) All of the above

Question 5

The U.S. federal government collects about one-half of the taxes in our economy.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Accepted Answer

A)   tax evasion
B)   a political payoff
C)   a tax loophole
D)   compensation for the benefit of societyE) B) and C)
F) None of the above

Question 7

Table 12-10
 
-Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be

Accepted Answer

A)   $4,531.
B)   $4,678.
C)   $4,950.
D)   $8,269.E) A) and D)
F) All of the above

Question 8

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

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) C) and D)
F) B) and C)

Question 9

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Accepted Answer

A) True 
 B)False

Question 10

If your income is $40,000 and your income tax liability is $5,000, your marginal tax rate is

Accepted Answer

A)   8 percent.
B)   12.5 percent.
C)   20 percent.
D)   unknown. We do not have enough information to answer this question.E) A) and B)
F) None of the above

Question 11

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 marginal tax rate for an individual with taxable income of $49,000?

Accepted Answer

A)   0%
B)   10%
C)   25%
D)   35%E) A) and B)
F) A) and D)

Question 12

What are the two main sources of tax revenues for state and local governments?

Accepted Answer

sales taxe...

Question 13

Suppose the government taxes 25 percent of the first $60,000 of income and 40 percent of all income above $60,000. For a person earning $200,000, the marginal tax rate is

Accepted Answer

A)   25 percent, and the average tax rate is 32.5 percent.
B)   25 percent, and the average tax rate is 36 percent.
C)   40 percent, and the average tax rate is 32.5 percent.
D)   40 percent, and the average tax rate is 36 percent.E) C) and D)
F) None of the above

Question 14

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 2012?

Accepted Answer

A)   17.6%
B)   20.5%
C)   21.3%
D)   26.2%E) A) and B)
F) B) and C)

Question 15

Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Accepted Answer

Although most Americans agree that equit...

Question 16

The average tax rate measures the

Accepted Answer

A)   fraction of spending paid in taxes.
B)   fraction of income paid in taxes.
C)   incremental rate of tax on income.
D)   average deadweight loss from all taxes.E) A) and B)
F) A) and C)

Question 17

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. What is total consumer surplus for Bob and Lisa?

Accepted Answer

A)   $0
B)   $2
C)   $5
D)   $7E) All of the above
F) A) and B)

Question 18

The U.S. income tax

Accepted Answer

A)   discourages saving.
B)   encourages saving.
C)   has no effect on saving.
D)   will reduce the administrative burden of taxation.E) A) and C)
F) A) and B)

Question 19

Many economists believe that

Accepted Answer

A)   the corporate income tax satisfies the goal of horizontal equity.
B)   the corporate income tax does not distort the incentives of customers.
C)   the corporate income tax is more efficient than the personal income tax.
D)   workers and customers bear much of the burden of the corporate income tax.E) C) and D)
F) A) and B)

Question 20

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Accepted Answer

According to Figure 1, in 1913, the fede...

Exam 12: The Design of the Tax System

The U.S. federal government collects about one-half of the taxes in our economy.

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Table 12-11 -Refer to Table 12-11. If Peggy has taxable income of $43,000, her average tax rate is

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If your income is $40,000 and your income tax liability is $5,000, your marginal tax rate is

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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 marginal tax rate for an individual with taxable income of $49,000?

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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 2012?

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

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Many economists believe that

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Briefly describe the tradeoff between equity and efficiency of tax systems using a few examples.

Correct AnswerverifiedAlthough most Americans agree that equit...View AnswerShow Answer

Over the past century in the U.S., what has been federal government revenue as a percentage of GDP? What has been state and local government revenue as a percentage of GDP?

Correct AnswerverifiedAccording to Figure 1, in 1913, the fede...View AnswerShow Answer

The average tax rate measures the

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The U.S. income tax

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

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Suppose the government taxes 25 percent of the first $60,000 of income and 40 percent of all income above $60,000. For a person earning $200,000, the marginal tax rate is

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Which of the following contributes to the projected rise in government spending on Social Security and Medicare as a percentage of GDP?

Correct AnswerverifiedShow Answer

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

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Which of the following describes a situation where tax laws give preferential treatment to specific types of behavior?

Correct AnswerverifiedShow Answer

What are the two main sources of tax revenues for state and local governments?

Correct Answerverifiedsales taxe...View AnswerShow Answer

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. What is total consumer surplus for Bob and Lisa?

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Sales taxes generate nearly 50% of the tax revenue for state and local governments.

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Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be

Correct AnswerverifiedShow Answer

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Although most Americans agree that equit...
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According to Figure 1, in 1913, the fede...
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sales taxe...
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