Question 1

Which of the following statements is not correct?

Accepted Answer

A)   The U.S.tax burden is high compared to many poor countries.
B)   As nations get richer,their governments typically collect a smaller share of income in taxes.
C)   The U.S.has a higher federal tax burden than China and India.
D)   The U.S.tax burden is low compared to many European countries.E) A) and B)
F) None of the above

Question 2

The federal healthcare spending program that specifically targets the poor is called

Accepted Answer

A)   Medicaid.
B)   Medicare.
C)   National Institutes of Health.
D)   Blue Cross/Blue Shield.E) B) and C)
F) B) and D)

Question 3

Table 12-12
United States Income Tax Rates for a Single Individual,2002 and 2003.
 
-Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her average tax rate in 2002?

Accepted Answer

A)   22.3%
B)   25.5%
C)   27.8%
D)   28.4%E) A) and C)
F) All of the above

Question 4

A tax system based on the ability-to-pay principle claims that all citizens should

Accepted Answer

A)   pay taxes based on the benefits they receive from government services.
B)   pay the same amount in taxes.
C)   pay taxes based on consumption rather than income.
D)   make an equal sacrifice.E) None of the above
F) C) and D)

Question 5

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) B) and C)

Question 6

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

Question 7

Total taxes paid divided by total income is called the

Accepted Answer

A)   lump-sum tax liability.
B)   marginal tax rate.
C)   average tax rate.
D)   average consumption tax liability.E) None of the above
F) All of the above

Question 8

Tax systems that impose record keeping requirements on taxpayers are said to have

Accepted Answer

A)   an auditing burden.
B)   a lower incidence of compliance.
C)   an administrative burden.
D)   a certification requirement.E) A) and B)
F) All of the above

Question 9

The U.S.federal government finances budget deficits by

Accepted Answer

A)   selling stock,much like a corporation.
B)   printing additional currency.
C)   borrowing from the public.
D)   raising property taxes.E) A) and B)
F) None of the above

Question 10

In the 1980s,President Ronald Reagan argued that high tax rates distorted economic incentives to work and save.In the 1990s,President Bill Clinton argued that the rich were not paying their fair share of taxes.Which of the following statements best summarizes the economic theories behind the differing philosophies?

Accepted Answer

A)   President Reagan was concerned about vertical equity,whereas President Clinton was concerned about horizontal equity.
B)   President Reagan was concerned about average tax rates,whereas President Clinton was concerned about horizontal equity.
C)   President Reagan was concerned about marginal tax rates,whereas President Clinton was concerned about vertical equity.
D)   None of the above is correct.E) All of the above
F) C) and D)

Question 11

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 tax liability for an individual with $280,000 in taxable income?

Accepted Answer

A)   $105,700
B)   $108,900
C)   $111,600
D)   $117,300E) A) and D)
F) None of the above

Question 12

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

Accepted Answer

A)   5 percent
B)   18 percent
C)   33 percent
D)   50 percentE) A) and D)
F) A) and B)

Question 13

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

Question 14

The federal taxes owed by a taxpayer depend

Accepted Answer

A)   only upon the marginal tax rate on the taxpayer's first $25,000 of income.
B)   only upon the marginal tax rate on the taxpayer's last $10,000 of income.
C)   upon all the marginal tax rates up to the taxpayer's overall level of income.
D)   upon all the marginal tax rates,including those for income levels that exceed the taxpayer's overall level of income.E) B) and D)
F) A) and B)

Question 15

Because taxes distort incentives,they typically result in

Accepted Answer

A)   deadweight losses.
B)   reductions in consumer surplus.
C)   reductions in producer surplus.
D)   All of the above are correct.E) All of the above
F) C) and D)

Question 16

Deadweight losses are associated with

Accepted Answer

A)   taxes that distort the incentives that people face.
B)   taxes that target expenditures on survivor's benefits for Social Security.
C)   taxes that have no efficiency losses.
D)   lump-sum taxes.E) C) and D)
F) None of the above

Question 17

An advantage of a consumption tax is that it does not distort the incentive to save.

Accepted Answer

A) True 
 B)False

Question 18

Individual income taxes generate rougly 25% of the tax revenue for the federal government.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

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

Question 20

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)   Falling fertility rates
C)   Increasing health care costs
D)   All of the above are correct.E) A) and D)
F) A) and B)

Exam 12: The Design of the Tax System

An advantage of a consumption tax is that it does not distort the incentive to save.

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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Deadweight losses are associated with

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

Correct Answer
verified

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 tax liability for an individual with $280,000 in taxable income?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

Correct Answer
verified

Tax systems that impose record keeping requirements on taxpayers are said to have

Correct Answer
verified

Total taxes paid divided by total income is called the

Correct Answer
verified

A tax system based on the ability-to-pay principle claims that all citizens should

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The U.S.federal government finances budget deficits by

Correct Answer
verified

The federal healthcare spending program that specifically targets the poor is called

Correct Answer
verified

Individual income taxes generate rougly 25% of the tax revenue for the federal government.

Correct Answer
verified

The federal taxes owed by a taxpayer depend

Correct Answer
verified

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her average tax rate in 2002?

Correct Answer
verified

Because taxes distort incentives,they typically result in

Correct Answer
verified

Correct Answer
verified

Exam 12: The Design of the Tax System

An advantage of a consumption tax is that it does not distort the incentive to save.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Deadweight losses are associated with

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

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 total tax liability for an individual with $280,000 in taxable income?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

Correct AnswerverifiedShow Answer

Tax systems that impose record keeping requirements on taxpayers are said to have

Correct AnswerverifiedShow Answer

Total taxes paid divided by total income is called the

Correct AnswerverifiedShow Answer

A tax system based on the ability-to-pay principle claims that all citizens should

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The U.S.federal government finances budget deficits by

Correct AnswerverifiedShow Answer

The federal healthcare spending program that specifically targets the poor is called

Correct AnswerverifiedShow Answer

Individual income taxes generate rougly 25% of the tax revenue for the federal government.

Correct AnswerverifiedShow Answer

The federal taxes owed by a taxpayer depend

Correct AnswerverifiedShow Answer

Table 12-12 United States Income Tax Rates for a Single Individual,2002 and 2003. -Refer to Table 12-12.Samantha is a single person whose taxable income is $100,000 a year.What is her average tax rate in 2002?

Correct AnswerverifiedShow Answer

Because taxes distort incentives,they typically result in

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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