Question 1

If all taxpayers pay the same percentage of income in taxes, the tax system is progressive.

Accepted Answer

A) True 
 B)False

Question 2

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Accepted Answer

A)   both are 10 percent
B)   10 percent and $2,000, respectively
C)   $3,000 and 10 percent, respectively
D)   $3,000 and 20 percent, respectivelyE) A) and B)
F) A) and C)

Question 3

In the United States, the payroll tax is also called a

Accepted Answer

A)   dividend income tax.
B)   social insurance tax.
C)   value added tax.
D)   capital gains tax.E) A) and D)
F) C) and D)

Question 4

Like spending on Social Security, the share of federal government spending on Medicare has risen substantially over time. This is most likely a result of

Accepted Answer

A)   a rising population of poor in the economy.
B)   a rising population of the elderly in the economy.
C)   an immigration policy that promotes an influx of migrant farm workers.
D)   All of the above are important factors.E) A) and B)
F) All of the above

Question 5

The resources that a taxpayer devotes to complying with the tax laws are a type of

Accepted Answer

A)   consumption tax.
B)   value-added tax.
C)   deadweight loss.
D)   producer surplus.E) B) and C)
F) A) and C)

Question 6

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

Question 7

Taxes on specific goods such as gasoline and alcoholic beverages are called

Accepted Answer

A)   excise taxes.
B)   payroll taxes.
C)   sales taxes.
D)   social insurance taxes.E) A) and B)
F) A) and C)

Question 8

Taxes can create deadweight losses because they

Accepted Answer

A)   allow the government to fund private goods.
B)   create administrative burdens as people comply with tax laws.
C)   allow the government to fund public goods.
D)   Both b and c are correct.E) A) and B)
F) A) and C)

Question 9

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 C)
F) C) and D)

Question 10

Lump-sum taxes are rarely used in the real world because

Accepted Answer

A)   while lump-sum taxes have low administrative burdens, they have high deadweight losses.
B)   while lump-sum taxes have low deadweight losses, they have high administrative burdens.
C)   lump-sum taxes are often viewed as unfair because they take the same amount of money from both poor and rich.
D)   lump-sum taxes are very inefficient.E) B) and C)
F) A) and C)

Question 11

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Accepted Answer

A)   include tax payments as well as transfer payments received.
B)   focus only on the tax payments of wealthy tax payers.
C)   limit their analysis to taxes based on the ability-to-pay principle.
D)   focus their analysis on issues of tax efficiency.E) B) and C)
F) A) and D)

Question 12

Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000. Calculate the marginal tax rate and the average tax rate for a person who earns $100,000.

Accepted Answer

The marginal tax rate would be 30 percen...

Question 13

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 $3 on a movie ticket and that, as a result, the price of a movie ticket increases to $8. What is total consumer surplus after the tax is imposed?

Accepted Answer

A)   $0
B)   $1
C)   $2
D)   $3E) A) and D)
F) B) and D)

Question 14

Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

Accepted Answer

A)   Her average tax rate is 33 percent and her marginal tax rate is 20 percent.
B)   Her average tax rate is 20 percent and her marginal tax rate is 33 percent.
C)   Her average tax rate is 20 percent and her marginal tax rate is 20 percent.
D)   Her average tax rate is 33 percent and her marginal tax rate is 33 percent.E) B) and C)
F) A) and D)

Question 15

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 16

An optimal tax is one that minimizes the

Accepted Answer

A)   external benefit.
B)   total deadweight loss from the tax.
C)   income taxes.
D)   horizontal equity.E) All of the above
F) A) and D)

Question 17

Table 12-10
 
-Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Accepted Answer

A)   10%.
B)   15%.
C)   25%.
D)   28%.E) A) and B)
F) B) and C)

Question 18

If a government simplified its tax system the likeliest result would be a decrease in

Accepted Answer

A)   consumer surplus.
B)   producer surplus.
C)   in deadweight loss.
D)   tax revenues.E) A) and D)
F) A) and C)

Question 19

In 2009, the top 1 percent of income earners made about

Accepted Answer

A)   1 percent of all income and paid about 1 percent of all taxes.
B)   13 percent of all income and paid about 22 percent of all taxes.
C)   22 percent of all income and paid about 13 percent of all taxes.
D)   50 percent of all income and paid about 50 percent of all taxes.E) A) and B)
F) A) and C)

Question 20

An excise tax is a tax on a specific good, like gasoline.

Accepted Answer

A) True 
 B)False

Exam 12: The Design of the Tax System

In the United States, the payroll tax is also called a

Correct Answer
verified

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

Correct Answer
verified

Taxes on specific goods such as gasoline and alcoholic beverages are called

Correct Answer
verified

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Correct Answer
verified

Lump-sum taxes are rarely used in the real world because

Correct Answer
verified

Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000. Calculate the marginal tax rate and the average tax rate for a person who earns $100,000.

Correct Answer
verified
The marginal tax rate would be 30 percen...
View Answer

An excise tax is a tax on a specific good, like gasoline.

Correct Answer
verified

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
verified
The marginal tax rate would be 20 percen...
View Answer

In 2009, the top 1 percent of income earners made about

Correct Answer
verified

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Correct Answer
verified

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Correct Answer
verified

Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

Correct Answer
verified

If all taxpayers pay the same percentage of income in taxes, the tax system is progressive.

Correct Answer
verified

Taxes can create deadweight losses because they

Correct Answer
verified

The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct Answer
verified

An optimal tax is one that minimizes the

Correct Answer
verified

Correct Answer
verified

Like spending on Social Security, the share of federal government spending on Medicare has risen substantially over time. This is most likely a result of

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

If a government simplified its tax system the likeliest result would be a decrease in

Correct Answer
verified

Exam 12: The Design of the Tax System

In the United States, the payroll tax is also called a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Taxes on specific goods such as gasoline and alcoholic beverages are called

Correct AnswerverifiedShow Answer

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Correct AnswerverifiedShow Answer

Lump-sum taxes are rarely used in the real world because

Correct AnswerverifiedShow Answer

Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000. Calculate the marginal tax rate and the average tax rate for a person who earns $100,000.

Correct AnswerverifiedThe marginal tax rate would be 30 percen...View AnswerShow Answer

An excise tax is a tax on a specific good, like gasoline.

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

In 2009, the top 1 percent of income earners made about

Correct AnswerverifiedShow Answer

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

Correct AnswerverifiedShow Answer

In order to construct a more complete picture of the economic burden of government across income classes, economists usually

Correct AnswerverifiedShow Answer

Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

Correct AnswerverifiedShow Answer

If all taxpayers pay the same percentage of income in taxes, the tax system is progressive.

Correct AnswerverifiedShow Answer

Taxes can create deadweight losses because they

Correct AnswerverifiedShow Answer

The resources that a taxpayer devotes to complying with the tax laws are a type of

Correct AnswerverifiedShow Answer

An optimal tax is one that minimizes the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Like spending on Social Security, the share of federal government spending on Medicare has risen substantially over time. This is most likely a result of

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

If a government simplified its tax system the likeliest result would be a decrease in

Correct AnswerverifiedShow Answer

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The marginal tax rate would be 30 percen...
View Answer

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verified
The marginal tax rate would be 20 percen...
View Answer

Correct Answer
verified

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Correct Answer
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