Question 1

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
 
-Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2013?

Accepted Answer

A)   10%
B)   15%
C)   12.5%
D)   28%E) A) and D)
F) None of the above

Question 2

Costas 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. Costas earns $70,000 per year in salary and another $20,000 per year in non-labor income. What is his average tax rate, and what is his marginal tax rate on his salary?

Accepted Answer

A)   His average tax rate is 17.19 percent, and the marginal tax rate on his salary is 55 percent.
B)   His average tax rate is 50.23 percent, and the marginal tax rate on his salary is 70.3 percent.
C)   His average tax rate is 53.63 percent, and the marginal tax rate on his salary is 70.3 percent.
D)   His average tax rate is 55.79 percent, and the marginal tax rate on his salary is 70.3 percent.E) A) and C)
F) A) and D)

Question 3

The two taxes that together provide the U.S. federal government with almost 80 percent of its revenue are

Accepted Answer

A)   individual income taxes and property taxes.
B)   individual income taxes and corporate income taxes.
C)   individual income taxes and payroll taxes.
D)   sales taxes and payroll taxes.E) B) and C)
F) B) and D)

Question 4

Taxes create deadweight losses because they

Accepted Answer

A)   reduce costs for firms.
B)   distort incentives.
C)   cause prices to decrease.
D)   create revenue for the government.E) B) and C)
F) A) and C)

Question 5

In 2010, the co­chairmen of President Obama's deficit reduction commission proposed curtailing or eliminating many tax deductions such as the one for mortgage interest. Economists who favor the proposal argue that it would (i)  correct a misallocation of resources because too much of the economy's capital stock is tied up in residential housing and too little is invested in corporate capital.
(ii)  cut both spending and taxes.
(iii)  encourage private philanthropy.

Accepted Answer

A)   (i)  only
B)   (ii)  only
C)   (i)  and (ii)  only
D)   (i) , (ii) , and (iii) E) C) and D)
F) A) and C)

Question 6

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Karen paid $6,000 in taxes. What were her marginal and average tax rates?

Accepted Answer

A)   20 percent and 12 percent, respectively
B)   20 percent and 15 percent, respectively
C)   10 percent and 12 percent respectively
D)   10 percent and 15 percent respectivelyE) A) and C)
F) C) and D)

Question 7

Scenario 12-1
Ken places a $20 value on a cigar, and Mark places a $17 value on it. The equilibrium price for this brand of cigar is $15.
-Refer to Scenario 12-1. Suppose the government levies a tax of $3 on each cigar, and the equilibrium price of a cigar increases to $18. How much tax revenue is collected?

Accepted Answer

A)   $0
B)   $2
C)   $3
D)   $6E) A) and B)
F) None of the above

Question 8

Country A's tax system is more efficient than Country B's tax system if

Accepted Answer

A)   Country A collects less tax revenue than Country B, and the cost to taxpayers is the same in both countries.
B)   Country A collects more tax revenue than Country B, even though the cost to taxpayers is greater in Country A than in Country B.
C)   the same amount of revenue is raised in both countries, but the cost to taxpayers is smaller in Country A than in Country c.
D)   the same amount of revenue is raised in both countries, but the taxes are collected in a shorter amount of time in Country A than in Country B.E) B) and C)
F) C) and D)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Most people agree that the tax system

Accepted Answer

A)   should be both efficient and equitable.
B)   cannot raise enough revenue to cover government expenditures.
C)   would raise more revenue if tax rates were lowered.
D)   should be rewritten to require everyone to pay the same percentage of income in taxes.E) None of the above
F) All of the above

Question 11

Individual Retirement Accounts and 401(k)  plans make the current U.S. tax system

Accepted Answer

A)   more like a consumption tax and so more like the tax system of many European countries.
B)   more like a consumption tax and so less like the tax system of many European countries.
C)   less like a consumption tax and so more like the tax system of many European countries.
D)   less like a consumption tax and so less like the tax system of many European countries.E) All of the above
F) None of the above

Question 12

If a government sells debt to help meet its expenditures, then the government has a

Accepted Answer

A)   budget surplus. Other things the same, the surplus rises if government expenditures rise.
B)   budget surplus. Other things the same, the surplus rises if government expenditures fall.
C)   budget deficit. Other things the same, the deficit rises if government expenditures rise.
D)   budget deficit. Other things the same the deficit rises if government expenditures fallE) None of the above
F) B) and D)

Question 13

The most efficient tax possible is a

Accepted Answer

A)   marginal income tax.
B)   lump-sum tax.
C)   consumption tax.
D)   corporate profit tax.E) A) and B)
F) All of the above

Question 14

Table 12-16
 
-Refer to Table 12-16. In this tax system which of the following is possible?

Accepted Answer

A)   vertical and horizontal equity
B)   vertical but not horizontal equity
C)   horizontal but not vertical equity
D)   neither horizontal nor vertical equityE) B) and C)
F) All of the above

Question 15

Table 12-9
United States Income Tax Rates for a Single Individual, 2012 and 2013.
 
-Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2012?

Accepted Answer

A)   22.3%
B)   25.3%
C)   27.8%
D)   28.4%E) B) and D)
F) A) and C)

Question 16

James earns income of $90,000 per year. His average tax rate is 40percent. 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) B) and C)
F) A) and B)

Question 17

Citizens expect the government to provide various goods and services making taxes

Accepted Answer

A)   inefficient.
B)   equitable.
C)   inevitable.
D)   intolerable.E) A) and B)
F) None of the above

Question 18

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Accepted Answer

A) True 
 B)False

Question 19

In 2011, the largest source of receipts for state and local governments was corporate income taxes.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 12: The Design of the Tax System

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

Correct Answer
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Country A's tax system is more efficient than Country B's tax system if

Correct Answer
verified

In 2011, the largest source of receipts for state and local governments was corporate income taxes.

Correct Answer
verified

Correct Answer
verified

Citizens expect the government to provide various goods and services making taxes

Correct Answer
verified

Most people agree that the tax system

Correct Answer
verified

The most efficient tax possible is a

Correct Answer
verified

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2012?

Correct Answer
verified

The two taxes that together provide the U.S. federal government with almost 80 percent of its revenue are

Correct Answer
verified

Individual Retirement Accounts and 401(k) plans make the current U.S. tax system

Correct Answer
verified

If a government sells debt to help meet its expenditures, then the government has a

Correct Answer
verified

Correct Answer
verified

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2013?

Correct Answer
verified

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

Correct Answer
verified

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Karen paid $6,000 in taxes. What were her marginal and average tax rates?

Correct Answer
verified

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Correct Answer
verified

James earns income of $90,000 per year. His average tax rate is 40percent. 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?

Correct Answer
verified

Taxes create deadweight losses because they

Correct Answer
verified

Table 12-16 -Refer to Table 12-16. In this tax system which of the following is possible?

Correct Answer
verified

Correct Answer
verified

Exam 12: The Design of the Tax System

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

Correct AnswerverifiedShow Answer

Country A's tax system is more efficient than Country B's tax system if

Correct AnswerverifiedShow Answer

In 2011, the largest source of receipts for state and local governments was corporate income taxes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Citizens expect the government to provide various goods and services making taxes

Correct AnswerverifiedShow Answer

Most people agree that the tax system

Correct AnswerverifiedShow Answer

The most efficient tax possible is a

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Samantha is a single person whose taxable income is $100,000 a year. What is her average tax rate in 2012?

Correct AnswerverifiedShow Answer

The two taxes that together provide the U.S. federal government with almost 80 percent of its revenue are

Correct AnswerverifiedShow Answer

Individual Retirement Accounts and 401(k) plans make the current U.S. tax system

Correct AnswerverifiedShow Answer

If a government sells debt to help meet its expenditures, then the government has a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2013?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The income tax requires that taxpayers pay 10percent on the first $40,000 of income and 20 percent on all income over $40,000. Karen paid $6,000 in taxes. What were her marginal and average tax rates?

Correct AnswerverifiedShow Answer

Horizontal equity can be difficult to assess because it is difficult to compare the similarity of tax payers.

Correct AnswerverifiedShow Answer

James earns income of $90,000 per year. His average tax rate is 40percent. 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?

Correct AnswerverifiedShow Answer

Taxes create deadweight losses because they

Correct AnswerverifiedShow Answer

Table 12-16 -Refer to Table 12-16. In this tax system which of the following is possible?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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