Question 1

Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 2

Table 12-14
 
-Refer to Table 12-14.A lump-sum tax is illustrated by tax

Accepted Answer

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

Question 3

In which of the following tax systems do taxes increase as income increases?

Accepted Answer

A)   both proportional and progressive
B)   proportional but not progressive
C)   progressive but not proportional
D)   neither proportional nor progressiveE) B) and D)
F) None of the above

Question 4

If a tax takes a smaller fraction of income as income rises,it is

Accepted Answer

A)   proportional.
B)   regressive.
C)   progressive.
D)   based on the ability-to-pay principle.E) A) and B)
F) All of the above

Question 5

The theory that the wealthy should contribute more to police protection than the poor because they have more to protect is based on

Accepted Answer

A)   the ability-to-pay principle.
B)   a consumption tax plan.
C)   the benefits principle.
D)   property tax assessments.E) B) and C)
F) None of the above

Question 6

A tax on all forms of income will

Accepted Answer

A)   lower the effective rate of interest on savings.
B)   have no effect on savings.
C)   enhance social welfare because the benefits will outweigh the costs.
D)   enhance the incentives to save.E) All of the above
F) B) and D)

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 is the average tax rate when income is $50,000?

Accepted Answer

A)   20 percent
B)   15 percent
C)   12 percent
D)   10 percentE) B) and D)
F) B) and C)

Question 8

Table 12-1
 
-Refer to Table 12-1.If Agatha has $80,000 in taxable income,her tax liability is

Accepted Answer

A)   $11,581.
B)   $16,181.
C)   $20,000.
D)   $24,881.E) B) and C)
F) A) and D)

Question 9

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 total income tax due for an individual with $49,000 in taxable income?

Accepted Answer

A)   $12,650
B)   $14,370
C)   $15,960
D)   $16,220E) A) and D)
F) All of the above

Question 10

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 $280,000 in taxable income?

Accepted Answer

A)   39.9%
B)   40.2%
C)   42.7%
D)   44.8%E) None of the above
F) B) and C)

Question 11

Many economists believe that the U.S.tax system would be made more efficient if the basis of taxation were changed so that people paid taxes,more so than they do now,based on

Accepted Answer

A)   their saving rather than their income.
B)   their spending rather than their income.
C)   their income rather than their wealth.
D)   their wealth rather than their spending.E) A) and D)
F) A) and C)

Question 12

Pat calculates that for every extra dollar she earns,she owes the government 40 cents.Her total income now is $44,000,on which she pays taxes of $11,000.Determine her average tax rate and her marginal tax rate.

Accepted Answer

A)   Her average tax rate is 40 percent and her marginal tax rate is 25 percent.
B)   Her average tax rate is 40 percent and her marginal tax rate is 40 percent.
C)   Her average tax rate is 25 percent and her marginal tax rate is 25 percent.
D)   Her average tax rate is 25 percent and her marginal tax rate is 40 percent.E) All of the above
F) A) and B)

Question 13

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
 
-Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What is his marginal tax rate in 2010?

Accepted Answer

A)   10%
B)   15%
C)   27%
D)   30%E) A) and B)
F) None of the above

Question 14

The principle that people should pay taxes based on the benefits they receive from government services is called the

Accepted Answer

A)   pay principle.
B)   tax-benefit principle.
C)   government services principle.
D)   benefits principle.E) A) and B)
F) A) and C)

Question 15

If the rich pay more in taxes than the poor,the tax system must be progressive.

Accepted Answer

A) True 
 B)False

Question 16

The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

Accepted Answer

A) True 
 B)False

Question 17

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)   the elderly population growing more rapidly than the overall population.
C)   an immigration policy that promotes an influx of migrant farm workers.
D)   All of the above are important factors.E) C) and D)
F) All of the above

Question 18

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 health care costs
C)   increasing fertility rates
D)   Both a and b are correct.E) C) and D)
F) B) and D)

Question 19

James earns income of $90,000 per year.His average tax rate is 40%.James paid $5,500 in taxes on the first $40,000 he earned.What was the marginal tax rate on the rest of his income?

Accepted Answer

A)   6.1 percent
B)   44 percent
C)   55 percent
D)   61 percentE) A) and D)
F) C) and D)

Question 20

Table 12-7
 
-Refer to Table 12-7.What is the average tax rate for a person who makes $120,000?

Accepted Answer

A)   25%
B)   35%
C)   45%
D)   60%E) A) and B)
F) A) and C)

Exam 12: The Design of the Tax System.

If the rich pay more in taxes than the poor,the tax system must be progressive.

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The theory that the wealthy should contribute more to police protection than the poor because they have more to protect is based on

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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

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The principle that people should pay taxes based on the benefits they receive from government services is called the

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In which of the following tax systems do taxes increase as income increases?

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Many economists believe that the U.S.tax system would be made more efficient if the basis of taxation were changed so that people paid taxes,more so than they do now,based on

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Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Kurt is a single person whose taxable income is $35,000 a year.What is his marginal tax rate in 2010?

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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 total income tax due for an individual with $49,000 in taxable income?

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Table 12-1 -Refer to Table 12-1.If Agatha has $80,000 in taxable income,her tax liability is

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Table 12-7 -Refer to Table 12-7.What is the average tax rate for a person who makes $120,000?

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Table 12-14 -Refer to Table 12-14.A lump-sum tax is illustrated by tax

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A tax on all forms of income will

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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 $280,000 in taxable income?

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Pat calculates that for every extra dollar she earns,she owes the government 40 cents.Her total income now is $44,000,on which she pays taxes of $11,000.Determine her average tax rate and her marginal tax rate.

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Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.

Correct AnswerverifiedShow Answer

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

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James earns income of $90,000 per year.His average tax rate is 40%.James paid $5,500 in taxes on the first $40,000 he earned.What was the marginal tax rate on the rest of his income?

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The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.

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 is the average tax rate when income is $50,000?

Correct AnswerverifiedShow Answer

If a tax takes a smaller fraction of income as income rises,it is

Correct AnswerverifiedShow Answer

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