Question 1

Table 12-6
The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. 
-Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with taxable income of $49,000?

Accepted Answer

A)  0%
B)  10%
C)  25%
D)  35%E) A) and B)
F) A) and C)

Question 2

Revenues from social insurance taxes are earmarked to pay for Social Security and Medicare.

Accepted Answer

A) True 
 B)False

Question 3

If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that

Accepted Answer

A)  the poor family should pay more in taxes to pay for public education than the rich family.
B)  the rich family should pay more in taxes to pay for public education than the poor family.
C)  the benefits of private school exceed those of public school.
D)  public schools should be financed by property taxes.E) A) and B)
F) C) and D)

Question 4

​Which of the following is an example of horizontal equity?

Accepted Answer

A)  ​A wealthy individual should pay more taxes than a lower-income individual ​
B)  A wealthy individual should have a greater average tax rate than a middle-income individual ​
C)  Two persons with identical incomes should pay the same taxes ​
D)  A local government decides to impose taxes based on the benefits principle ​E) None of the above
F) C) and D)

Question 5

Suppose a state has the following individual income tax structure. The first $20,000 that an individual earns is taxed at 5%. The next $30,000 is taxed at 10%. Any income exceeding $50,000 is taxed at 20%. Based on this tax structure, if a person's income rises from $45,000 to $55,000, his marginal tax rate is:

Accepted Answer

A)  ​25%
B)  ​20%
C)  ​10%
D)  ​15%E) A) and B)
F) None of the above

Question 6

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Accepted Answer

A)  the ability-to-pay principle.
B)  the equity principle.
C)  the benefits principle.
D)  regressive.E) C) and D)
F) A) and D)

Question 7

​Which of the following is an example of horizontal equity?

Accepted Answer

A)  ​A wealthy individual should pay more taxes than a lower-income individual ​
B)  A wealthy individual should have a greater average tax rate than a middle-income individual ​
C)  Two persons with identical incomes should pay the same taxes ​
D)  A local government decides to impose taxes based on the benefits principle ​E) None of the above
F) B) and C)

Question 8

Table 12-17
The following table shows the marginal tax rates for unmarried individuals for two years. 
-Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Accepted Answer

A)  proportional tax
B)  progressive tax
C)  regressive tax
D)  vertical taxE) B) and C)
F) A) and B)

Question 9

Table 12-3 
-Refer to Table 12-3. What is the marginal tax rate for a person who makes $35,000?

Accepted Answer

A)  20%
B)  30%
C)  40%
D)  50%E) A) and C)
F) None of the above

Question 10

Scenario 12-4
A taxpayer faces the following tax rates on her income:
20 percent of the first $40,000 of her income;
30 percent of all her income above $40,000.
-Refer to Scenario 12-4. The taxpayer faces a marginal tax rate of

Accepted Answer

A)  20 percent when her income rises from $40,000 to $40,001.
B)  20 percent when her income rises from $30,000 to $30,001.
C)  0 percent when her income rises from $30,000 to $30,001.
D)  10 percent when her income rises from $40,000 to $40,001.E) A) and B)
F) C) and D)

Question 11

Suppose Hillary values a large order of French fries at $4. Bill values a large order of French fries at $7. The pre-tax price of a large order of French fries is $2. The government imposes a "fat tax" of $3 on each large order of French fries, and the price rises to $5. The deadweight loss from the tax is

Accepted Answer

A)  $4, and the deadweight loss comes from both Hillary and Bill.
B)  $4, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.
C)  $2, and the deadweight loss comes from both Hillary and Bill.
D)  $2, and the deadweight loss comes only from Hillary because she does not buy a large French fries after the tax.E) C) and D)
F) None of the above

Question 12

Deadweight losses represent the

Accepted Answer

A)  inefficiency that taxes create.
B)  shift in benefit from producers to consumers.
C)  part of consumer and producer surplus that is now revenue to the government.
D)  increase in revenue to the government.E) C) and D)
F) B) and C)

Question 13

Horizontal 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 be taxed according to their ability to pay.
D)  should receive government benefits according to how much they have been taxed.E) B) and C)
F) All of the above

Question 14

Which of the following is not an administrative burden of our tax system?

Accepted Answer

A)  government resources used to enforce tax laws
B)  keeping tax records throughout the year
C)  paying the taxes owed
D)  time spent in April filling out formsE) C) and D)
F) A) and B)

Question 15

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

Question 16

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A)  marginal tax.
B)  administrative burden.
C)  deadweight loss.
D)  Both b and c are correct.E) A) and C)
F) C) and D)

Question 18

A person's tax obligation divided by her income is called her

Accepted Answer

A)  marginal social tax rate.
B)  marginal private tax rate.
C)  marginal tax rate.
D)  average tax rate.E) C) and D)
F) B) and D)

Question 19

Table 12-15 
-Refer to Table 12-15. The tax system is

Accepted Answer

A)  proportional.
B)  regressive.
C)  progressive.
D)  lump sum.E) A) and C)
F) A) and B)

Question 20

Horizontal 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 be taxed according to their ability to pay.
D)  should receive government benefits according to how much they have been taxed.E) A) and B)
F) A) and C)

Exam 12: The Design of the Tax System

Which of the following is an example of horizontal equity?

Correct Answer
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Which of the following is not an administrative burden of our tax system?

Correct Answer
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A person's tax obligation divided by her income is called her

Correct Answer
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Table 12-3 -Refer to Table 12-3. What is the marginal tax rate for a person who makes $35,000?

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

Correct Answer
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Table 12-15 -Refer to Table 12-15. The tax system is

Correct Answer
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Which of the following is an example of horizontal equity?

Correct Answer
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Revenues from social insurance taxes are earmarked to pay for Social Security and Medicare.

Correct Answer
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Correct Answer
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The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

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

Correct Answer
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Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Correct Answer
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One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

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

Correct Answer
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Deadweight losses represent the

Correct Answer
verified

Correct Answer
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If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that

Correct Answer
verified

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

Correct Answer
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Scenario 12-4 A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000. -Refer to Scenario 12-4. The taxpayer faces a marginal tax rate of

Correct Answer
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Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with taxable income of $49,000?

Correct Answer
verified

Exam 12: The Design of the Tax System

​Which of the following is an example of horizontal equity?

Correct AnswerverifiedShow Answer

Which of the following is not an administrative burden of our tax system?

Correct AnswerverifiedShow Answer

A person's tax obligation divided by her income is called her

Correct AnswerverifiedShow Answer

Table 12-3 -Refer to Table 12-3. What is the marginal tax rate for a person who makes $35,000?

Correct AnswerverifiedShow Answer

Horizontal equity in taxation refers to the idea that people

Correct AnswerverifiedShow Answer

Table 12-15 -Refer to Table 12-15. The tax system is

Correct AnswerverifiedShow Answer

​Which of the following is an example of horizontal equity?

Correct AnswerverifiedShow Answer

Revenues from social insurance taxes are earmarked to pay for Social Security and Medicare.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

Correct AnswerverifiedShow Answer

Horizontal equity in taxation refers to the idea that people

Correct AnswerverifiedShow Answer

Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-17. Which of the following best describes the tax schedule in 2009?

Correct AnswerverifiedShow Answer

One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Deadweight losses represent the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a poor family has three children in public school and a rich family has two children in private school, the benefits principle would suggest that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Scenario 12-4 A taxpayer faces the following tax rates on her income: 20 percent of the first $40,000 of her income; 30 percent of all her income above $40,000. -Refer to Scenario 12-4. The taxpayer faces a marginal tax rate of

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Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with taxable income of $49,000?

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Which of the following is an example of horizontal equity?

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Which of the following is an example of horizontal equity?

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