Question 1

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Accepted Answer

A) True 
 B)False

Question 2

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...

Question 3

A person's tax liability refers to

Accepted Answer

A)   the percentage of income that a person must pay in taxes.
B)   the amount of tax a person owes to the government.
C)   the amount of tax the government is required to refund to each person.
D)   deductions that can be legally subtracted from a person's income each year.E) None of the above
F) B) and C)

Question 4

A value-added tax or VAT is a tax on

Accepted Answer

A)   retail purchases only.
B)   wholesale purchases only.
C)   pollution.
D)   all stages of production of a good.E) B) and C)
F) All of the above

Question 5

Economists play an important role in the complex debates over tax policy by

Accepted Answer

A)   identifying efficiency as the most important goal of tax policy.
B)   identifying equity as the most important goal of tax policy.
C)   shedding light on the tradeoff between efficiency and equity in tax policy.
D)   None of the above is correct.E) All of the above
F) A) and C)

Question 6

State and local governments generate revenue from all of the following sources except

Accepted Answer

A)   sales taxes.
B)   the federal government.
C)   corporate income taxes.
D)   customs duties.E) B) and C)
F) A) and B)

Question 7

Vertical equity states that taxpayers with a greater ability to pay taxes should

Accepted Answer

A)   contribute a decreasing proportion of each increment in income to taxes.
B)   contribute a larger amount than those with a lesser ability to pay.
C)   be less subject to administrative burdens of a tax.
D)   be less subject to tax distortions that lead to deadweight losses.E) C) and D)
F) All of the above

Question 8

The idea that people in equal conditions should pay equal taxes is referred to as

Accepted Answer

A)   horizontal equity.
B)   vertical equity.
C)   the ability-to-pay principle.
D)   the marriage tax.E) None of the above
F) A) and B)

Question 9

A tax imposed at every stage of production is a

Accepted Answer

A)   value-added tax.
B)   lump sum tax.
C)   corrective tax.
D)   regressive tax.E) B) and D)
F) None of the above

Question 10

Maurice faces a progressive federal income tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. In addition, he must pay 5 percent of his income in state income tax and 15.3 percent of his labor income in federal payroll taxes. Maurice earns $60,000 per year in salary and another $10,000 per year in non-labor income. What is his average tax rate?

Accepted Answer

A)   17.19 percent
B)   46.69 percent
C)   48.87 percent
D)   56.01 percentE) A) and D)
F) B) and C)

Question 11

If the government imposes a tax of $3,000 on everyone, the tax would be a(n)

Accepted Answer

A)   income tax.
B)   consumption tax.
C)   lump-sum tax.
D)   marginal tax.E) B) and C)
F) A) and D)

Question 12

Medicaid is

Accepted Answer

A)   the government's health plan for the elderly.
B)   the government's health plan for the poor.
C)   another name for Social Security.
D)   Both a and c are correct.E) B) and D)
F) A) and C)

Question 13

From 1950 to today, government spending on Social Security, Medicare, and Medicaid as a percentage of GDP has

Accepted Answer

A)   decreased from about ten percent to less than one percent.
B)   increased from less than one percent to about ten percent.
C)   remained constant at less than one percent.
D)   remained constant at about ten percent.E) B) and D)
F) All of the above

Question 14

A tax that is higher for men than for women violates the criterion of

Accepted Answer

A)   horizontal equity.
B)   vertical equity.
C)   the ability-to-pay principle.
D)   the marriage tax.E) B) and D)
F) B) and C)

Question 15

Tax systems that impose recordkeeping requirements on taxpayers are said to have a(n)

Accepted Answer

A)   auditing burden.
B)   lower incidence of compliance.
C)   administrative burden.
D)   certification requirement.E) None of the above
F) A) and B)

Question 16

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

Accepted Answer

sales taxe...

Question 17

Table 12-10 
-Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be

Accepted Answer

A)   $16,781.
B)   $41,309.
C)   $41,827.
D)   $47,600.E) A) and B)
F) B) and C)

Question 18

A tax system exhibits vertical equity when taxpayers with similar abilities to pay contribute the same amount.

Accepted Answer

A) True 
 B)False

Question 19

A lump-sum tax minimizes deadweight loss.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)   has a very high income.
B)   has a very low income.
C)   is self-employed.
D)   invests in a retirement plan.E) None of the above
F) C) and D)

Exam 12: The Design of the Tax System

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

Correct Answer
verified

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

Correct Answer
verified
sales taxe...
View Answer

A lump-sum tax minimizes deadweight loss.

Correct Answer
verified

A tax system exhibits vertical equity when taxpayers with similar abilities to pay contribute the same amount.

Correct Answer
verified

From 1950 to today, government spending on Social Security, Medicare, and Medicaid as a percentage of GDP has

Correct Answer
verified

If the government imposes a tax of $3,000 on everyone, the tax would be a(n)

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be

Correct Answer
verified

The idea that people in equal conditions should pay equal taxes is referred to as

Correct Answer
verified

A tax that is higher for men than for women violates the criterion of

Correct Answer
verified

Tax systems that impose recordkeeping requirements on taxpayers are said to have a(n)

Correct Answer
verified

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 Answer
verified
According to Figure 1, in 1913, the fede...
View Answer

Correct Answer
verified

Economists play an important role in the complex debates over tax policy by

Correct Answer
verified

A person's tax liability refers to

Correct Answer
verified

Medicaid is

Correct Answer
verified

A tax imposed at every stage of production is a

Correct Answer
verified

State and local governments generate revenue from all of the following sources except

Correct Answer
verified

Vertical equity states that taxpayers with a greater ability to pay taxes should

Correct Answer
verified

A value-added tax or VAT is a tax on

Correct Answer
verified

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct Answer
verified

Exam 12: The Design of the Tax System

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

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedsales taxe...View AnswerShow Answer

A lump-sum tax minimizes deadweight loss.

Correct AnswerverifiedShow Answer

A tax system exhibits vertical equity when taxpayers with similar abilities to pay contribute the same amount.

Correct AnswerverifiedShow Answer

From 1950 to today, government spending on Social Security, Medicare, and Medicaid as a percentage of GDP has

Correct AnswerverifiedShow Answer

If the government imposes a tax of $3,000 on everyone, the tax would be a(n)

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be

Correct AnswerverifiedShow Answer

The idea that people in equal conditions should pay equal taxes is referred to as

Correct AnswerverifiedShow Answer

A tax that is higher for men than for women violates the criterion of

Correct AnswerverifiedShow Answer

Tax systems that impose recordkeeping requirements on taxpayers are said to have a(n)

Correct AnswerverifiedShow 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

Correct AnswerverifiedShow Answer

Economists play an important role in the complex debates over tax policy by

Correct AnswerverifiedShow Answer

A person's tax liability refers to

Correct AnswerverifiedShow Answer

Medicaid is

Correct AnswerverifiedShow Answer

A tax imposed at every stage of production is a

Correct AnswerverifiedShow Answer

State and local governments generate revenue from all of the following sources except

Correct AnswerverifiedShow Answer

Vertical equity states that taxpayers with a greater ability to pay taxes should

Correct AnswerverifiedShow Answer

A value-added tax or VAT is a tax on

Correct AnswerverifiedShow Answer

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
sales taxe...
View Answer

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

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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