Question 1

A payroll tax is a tax on

Accepted Answer

A)   the wages that a firm pays its workers.
B)   earned and unearned income.
C)   specific goods like gasoline and cigarettes.
D)   corporate profits.E) C) and D)
F) A) and D)

Question 2

A tax on the wages that a firm pays its workers is called

Accepted Answer

A)   an income tax.
B)   an excise tax.
C)   a consumption tax.
D)   a payroll tax.E) B) and C)
F) A) and D)

Question 3

Table 12-1
 
-Refer to Table 12-1.If Celeste has $47,000 in taxable income,her tax liability will be

Accepted Answer

A)   $6,900.
B)   $7,600.
C)   $8,400.
D)   $11,750.E) B) and C)
F) B) and D)

Question 4

Table 12-1
 
-Refer to Table 12-1.If Barb has $126,000 in taxable income,her average tax rate is

Accepted Answer

A)   21.7%.
B)   22.2%.
C)   22.9%.
D)   23.5%.E) All of the above
F) A) and D)

Question 5

Vertical equity in taxation refers to the idea that people

Accepted Answer

A)   in unequal conditions should be treated differently.
B)   in equal conditions should pay equal taxes.
C)   should pay taxes based on the benefits they receive from the government.
D)   should pay a proportional tax rather than a progressive tax.E) All of the above
F) C) and D)

Question 6

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) A) and D)
F) A) and C)

Question 7

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) C) and D)
F) B) and C)

Question 8

Table 12-17
 
-Refer to Table 12-17.A lump-sum tax is illustrated by tax

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) A) and C)

Question 9

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

Question 10

Table 12-8
 
-Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

Accepted Answer

A)   0 percent.
B)   5 percent.
C)   6.7 percent.
D)   10 percent.E) C) and D)
F) A) and C)

Question 11

Two families who live in Plains,GA have identical incomes.The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year.The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies

Accepted Answer

A)   an application of the benefits principle of taxation.
B)   a violation of horizontal equity.
C)   a violation of vertical equity.
D)   an application of egalitarian tax rules.E) A) and B)
F) A) and C)

Question 12

Which of the following is a characteristic of a more efficient tax system?

Accepted Answer

A)   The system minimizes deadweight loss.
B)   The system raises the same amount of revenue at a lower cost.
C)   The system minimizes administrative burdens.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 13

Table 12-9
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income.
 
-Refer to Table 12-9.For this tax schedule,what is the average tax rate for an individual with $49,000 in taxable income?

Accepted Answer

A)   25.8%
B)   27.5%.
C)   40.0%
D)   43.7%E) None of the above
F) A) and C)

Question 14

If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

Accepted Answer

A) True 
 B)False

Question 15

Sue earns income of $80,000 per year.Her average tax rate is 40 percent.Sue paid $4,500 in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income?

Accepted Answer

A)   15 percent
B)   32 percent
C)   40 percent
D)   55 percentE) C) and D)
F) A) and B)

Question 16

The amount of income tax owed by a family is

Accepted Answer

A)   not simply proportional to its total income.
B)   unaffected by deductions.
C)   total income minus tax credits.
D)   a constant fraction of income.E) A) and B)
F) All of the above

Question 17

Which of the following is not a cost of taxes to taxpayers?

Accepted Answer

A)   The tax payment itself
B)   Deadweight losses
C)   Administrative burdens
D)   Goods and services provided by the governmentE) C) and D)
F) B) and C)

Question 18

Stacy places a $20 value on a bottle of wine,and Andrea places a $17 value on it.The equilibrium price for a bottle of wine is $15.Suppose the government levies a tax of $1 on each bottle of wine,and the equilibrium price of a bottle of wine increases to $16.What is total consumer surplus after the tax is levied?

Accepted Answer

A)   $2
B)   $3
C)   $4
D)   $5E) C) and D)
F) B) and C)

Question 19

Table 12-15
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-15.Which of the three tax systems is regressive?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   None of the systems are regressive.E) C) and D)
F) None of the above

Question 20

By far,the largest single expenditure item for state and local governments is for

Accepted Answer

A)   highways.
B)   police and fire protection.
C)   transfer payments to poor people.
D)   education.E) All of the above
F) A) and C)

Exam 12: The Design of the Tax System

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-15.Which of the three tax systems is regressive?

Correct Answer
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Table 12-1 -Refer to Table 12-1.If Celeste has $47,000 in taxable income,her tax liability will be

Correct Answer
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Sue earns income of $80,000 per year.Her average tax rate is 40 percent.Sue paid $4,500 in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income?

Correct Answer
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Two families who live in Plains,GA have identical incomes.The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year.The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies

Correct Answer
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A tax on the wages that a firm pays its workers is called

Correct Answer
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Vertical equity in taxation refers to the idea that people

Correct Answer
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Correct Answer
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The amount of income tax owed by a family is

Correct Answer
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Table 12-17 -Refer to Table 12-17.A lump-sum tax is illustrated by tax

Correct Answer
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Which of the following is a characteristic of a more efficient tax system?

Correct Answer
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Which of the following is not a cost of taxes to taxpayers?

Correct Answer
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Table 12-8 -Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

Correct Answer
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A payroll tax is a tax on

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

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
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By far,the largest single expenditure item for state and local governments is for

Correct Answer
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If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

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

Correct Answer
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Table 12-1 -Refer to Table 12-1.If Barb has $126,000 in taxable income,her average tax rate is

Correct Answer
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Table 12-9 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-9.For this tax schedule,what is the average tax rate for an individual with $49,000 in taxable income?

Correct Answer
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Exam 12: The Design of the Tax System

Table 12-15 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-15.Which of the three tax systems is regressive?

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Celeste has $47,000 in taxable income,her tax liability will be

Correct AnswerverifiedShow Answer

Sue earns income of $80,000 per year.Her average tax rate is 40 percent.Sue paid $4,500 in taxes on the first $30,000 she earned.What was the marginal tax rate on the rest of her income?

Correct AnswerverifiedShow Answer

Two families who live in Plains,GA have identical incomes.The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year.The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies

Correct AnswerverifiedShow Answer

A tax on the wages that a firm pays its workers is called

Correct AnswerverifiedShow Answer

Vertical equity in taxation refers to the idea that people

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The amount of income tax owed by a family is

Correct AnswerverifiedShow Answer

Table 12-17 -Refer to Table 12-17.A lump-sum tax is illustrated by tax

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of a more efficient tax system?

Correct AnswerverifiedShow Answer

Which of the following is not a cost of taxes to taxpayers?

Correct AnswerverifiedShow Answer

Table 12-8 -Refer to Table 12-8.If the government imposes a $3,000 lump-sum tax,the marginal tax rate for Charles would be

Correct AnswerverifiedShow Answer

A payroll tax is a tax on

Correct AnswerverifiedShow Answer

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

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

By far,the largest single expenditure item for state and local governments is for

Correct AnswerverifiedShow Answer

If James earns $80,000 in taxable income and pays $20,000 in taxes,his average tax rate is 25 percent.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Barb has $126,000 in taxable income,her average tax rate is

Correct AnswerverifiedShow Answer

Table 12-9 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-9.For this tax schedule,what is the average tax rate for an individual with $49,000 in taxable income?

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