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Exam 12: The Design of the Tax System

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Question 231

True/False

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In the United States, all families pay the same proportion of their income in taxes.

A) True
B) False

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Question 232

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The U.S. tax burden is

A) about the same as most European countries.
B) higher than most European countries.
C) lower than most European countries.
D) higher than all European countries.

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

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Question 233

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Scenario 12-3 Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice, $9 for his second slice, and $5 for his third slice. The current market price is $5 per slice. -Refer to Scenario 12-3. How much consumer surplus does Regina receive from consuming her slice of cheesecake?

Table 12-2 -Refer to Table 12-2. Suppose that the government imposes a $2 tax on delights, causing the price to increase from $4.00 to $6.00. Deadweight loss arises because

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

​Karole's income rises from $50,000 to $75,000 and her income tax increases from $8,000 to $9,500.Her average tax rate is 6%.

The most efficient tax possible is a

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

According to the benefits principle, it is fair for people to pay taxes based on the benefits they receive from the government.

European countries tend to rely more on consumption taxes than does the United States.

​A city finances a performing arts center by adding a $2.75 tax to each ticket sold.This is an example of taxation via the benefits principle.

The government raises revenue through taxation to pay for the services it provides.

What has been the relationship over the past century between the U.S. economy's income and the percentage of that income that the government collects in revenues?

Rank the following state and local government expenditure categories from largest to smallest.

When interest income from savings is taxed, people will save

When the government levies a tax on a corporation,

If tax revenues from a cigarette tax are used to pay for healthcare expenses related to lung cancer, the cigarette tax could be justified using the __________.

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?

Table 12-17 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-17. Suppose one goal of the tax system was to achieve vertical equity. While people may disagree about what is "equitable," based on the marginal tax rates given for the two years, which of the following statements is true?

Scenario 12-5 Senator Filch argues that a tax must be paid by people who benefit from government services. Senator Fudge argues that a tax must be paid in accordance with a person's ability to bear the tax burden. Senator Malfoy argues that people with a greater ability to pay a tax should pay a larger amount. Senator Moody argues that taxpayers with similar abilities to pay should contribute the same amount. -Refer to Scenario 12-5. Which Senator is advocating taxes based on a person's ability to pay?