Question 1

Table 12-2
Consider the tax rates shown in the table below.
 
-Refer to Table 12-2.If Max has taxable income of $227,000,his tax liability is

Accepted Answer

A)   $57,220.
B)   $60,870.
C)   $64,980.
D)   $68,770.E) A) and D)
F) B) and C)

Question 2

Table 12-13
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-13.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?

Accepted Answer

A)   Vertical equity is possible in both years.
B)   Vertical equity is possible in 2005 but not in 2006.
C)   Vertical equity is not possible in 2005 but is possible in 2006.
D)   Vertical equity is not possible in either year.E) None of the above
F) B) and D)

Question 3

Which of the following statements is correct?

Accepted Answer

A)   A general sales tax on food is regressive when low-income taxpayers spend a larger proportion of their income on food than high-income taxpayers.
B)   A general sales tax on food is regressive when middle income taxpayers spend a smaller proportion of their income on food than high-income taxpayers.
C)   A general sales tax on food is regressive when high-income taxpayers spend a larger proportion of their income on food than middle income taxpayers.
D)   A general sales tax on food is regressive when high-income taxpayers spend a larger proportion of their income on food than low-income taxpayers.E) C) and D)
F) B) and D)

Question 4

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Accepted Answer

A) True 
 B)False

Question 5

Because the marginal tax rate rises as income rises,

Accepted Answer

A)   higher income families,in general,pay a larger percentage of their income in taxes.
B)   lower income families,in general,pay a larger percentage of their income in taxes.
C)   a disproportionately large share of the tax burden falls upon the poor.
D)   higher income families pay the same percentage of their income in taxes as lower-income families.E) B) and C)
F) A) and D)

Question 6

The public welfare spending category for state and local governments includes

Accepted Answer

A)   many programs that are initiated by private foundations.
B)   contributions in support of public universities.
C)   some federal programs that are administered by state and local governments.
D)   All of the above are correct.E) A) and D)
F) None of the above

Question 7

The idea that people in equal conditions should pay equal taxes is referred to as

Accepted Answer

A)   horizontal equity.
B)   vertical equity.
C)   the ability-to-pay principle.
D)   the marriage tax.E) A) and D)
F) C) and D)

Question 8

The government finances the budget deficit by

Accepted Answer

A)   borrowing from the public.
B)   borrowing solely from the Federal Reserve Bank.
C)   printing currency in the amount of the budget deficit.
D)   requiring that budget surpluses occur every other year to pay off the deficits.E) A) and B)
F) B) and C)

Question 9

Corporate profits are

Accepted Answer

A)   included in payroll taxes.
B)   exempt from taxes.
C)   taxed twice,once as profit and once as dividends.
D)   taxed to pay for Medicare.E) C) and D)
F) A) and B)

Question 10

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Accepted Answer

A)   Corporate income taxes,individual income taxes,social insurance taxes
B)   Social insurance taxes,individual income taxes,corporate income taxes
C)   Individual income taxes,social insurance taxes,corporate income taxes
D)   Individual income taxes,corporate income taxes,social insurance taxesE) C) and D)
F) A) and D)

Question 11

Table 12-1
 
-Refer to Table 12-1.If Barb has $126,000 in taxable income,her tax liability will be

Accepted Answer

A)   $27,940.
B)   $28,270.
C)   $29,650.
D)   $35,280.E) B) and C)
F) A) and D)

Question 12

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Accepted Answer

A)   has decreased from about 20 percent to about 10 percent.
B)   has remained constant at about 10 percent.
C)   has risen from less than 2 percent to about 44.4 percent.
D)   has risen from less than 5 percent to about 33.3 percent.E) None of the above
F) B) and D)

Question 13

Which of the following statements is correct?

Accepted Answer

A)   National defense and health care are the two largest spending categories for the federal government.
B)   Welfare programs and highways are the two largest spending categories for state and local governments.
C)   Sales taxes and property taxes are the two most important revenue sources for state and local governments.
D)   Corporate income taxes are the largest source of revenue for the federal government.E) A) and B)
F) B) and D)

Question 14

Scenario 12-3.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 12-3.At what level of income would the taxpayer's marginal tax rate be 30 percent and her average tax rate be 25 percent?

Accepted Answer

A)   $42,000
B)   $57,000
C)   $60,000
D)   $80,000E) A) and B)
F) B) and C)

Question 15

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 marginal tax rate for an invidvidual with $212,000 in taxable income?

Accepted Answer

A)   0%
B)   1%
C)   2%
D)   45%E) A) and B)
F) A) and D)

Question 16

Temporary Assistance for Needy Families (TANF) falls into which spending category?

Accepted Answer

A)   Medicare
B)   Income security
C)   Guaranteed social eligibility
D)   Social SecurityE) A) and C)
F) None of the above

Question 17

According to the benefits principle,it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Accepted Answer

A) True 
 B)False

Question 18

With a lump-sum tax,the

Accepted Answer

A)   marginal tax rate is always less than the average tax rate.
B)   average tax rate is always less than the marginal tax rate.
C)   marginal tax rate falls as income rises.
D)   marginal tax rate rises as income rises.E) All of the above
F) B) and D)

Question 19

A budget surplus occurs when government receipts fall short of government spending.

Accepted Answer

A) True 
 B)False

Question 20

The average tax rate measures the

Accepted Answer

A)   fraction of spending paid in taxes.
B)   fraction of income paid in taxes.
C)   incremental rate of tax on income.
D)   average deadweight loss from all taxes.E) B) and C)
F) All of the above

Exam 12: The Design of the Tax System

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Correct Answer
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According to the benefits principle,it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Correct Answer
verified

Which of the following statements is correct?

Correct Answer
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The average tax rate measures the

Correct Answer
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Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Correct Answer
verified

The government finances the budget deficit by

Correct Answer
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The idea that people in equal conditions should pay equal taxes is referred to as

Correct Answer
verified

A budget surplus occurs when government receipts fall short of government spending.

Correct Answer
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With a lump-sum tax,the

Correct Answer
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Table 12-1 -Refer to Table 12-1.If Barb has $126,000 in taxable income,her tax liability will be

Correct Answer
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Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Max has taxable income of $227,000,his tax liability is

Correct Answer
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The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Correct Answer
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The public welfare spending category for state and local governments includes

Correct Answer
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Because the marginal tax rate rises as income rises,

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 marginal tax rate for an invidvidual with $212,000 in taxable income?

Correct Answer
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Correct Answer
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Temporary Assistance for Needy Families (TANF) falls into which spending category?

Correct Answer
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Corporate profits are

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Exam 12: The Design of the Tax System

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

Correct AnswerverifiedShow Answer

According to the benefits principle,it is fair for people to pay taxes based on their ability to shoulder the tax burden.

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The average tax rate measures the

Correct AnswerverifiedShow Answer

Deadweight losses and administrative burdens are key factors considered when determining the efficiency of the tax system.

Correct AnswerverifiedShow Answer

The government finances the budget deficit by

Correct AnswerverifiedShow Answer

The idea that people in equal conditions should pay equal taxes is referred to as

Correct AnswerverifiedShow Answer

A budget surplus occurs when government receipts fall short of government spending.

Correct AnswerverifiedShow Answer

With a lump-sum tax,the

Correct AnswerverifiedShow Answer

Table 12-1 -Refer to Table 12-1.If Barb has $126,000 in taxable income,her tax liability will be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 12-2 Consider the tax rates shown in the table below. -Refer to Table 12-2.If Max has taxable income of $227,000,his tax liability is

Correct AnswerverifiedShow Answer

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

Correct AnswerverifiedShow Answer

The public welfare spending category for state and local governments includes

Correct AnswerverifiedShow Answer

Because the marginal tax rate rises as income rises,

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 marginal tax rate for an invidvidual with $212,000 in taxable income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Temporary Assistance for Needy Families (TANF) falls into which spending category?

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Corporate profits are

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

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