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Exam 12: The Design of the Tax System

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Question 211

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In order to construct a more complete picture of the economic burden of government across income classes, economists usually

A) include tax payments as well as transfer payments received.
B) focus only on the tax payments of wealthy tax payers.
C) limit their analysis to taxes based on the ability-to-pay principle.
D) focus their analysis on issues of tax efficiency.

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

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Question 212

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Table 12-22 -Refer to Table 12-22. A lump-sum tax is illustrated by tax

A) A.
B) B.
C) C.
D) D.

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

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Question 213

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

The largest source of revenue for the federal government is the

If a tax generates a reduction in surplus that is exactly offset by the tax revenue collected by the government, the tax does not have a deadweight loss.

Which of the following is true about the percent of total income all levels of government in the U.S. take as taxes?

If New York City imposed a 50 cent tax on soft-drink beverages that contain sugar or high-fructose corn syrup, it would

One advantage of a lump-sum tax over other taxes is that it

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

Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the average tax rate when income is $60,000?

If Mary earns $80,000 in taxable income and pays $40,000 in taxes, her marginal tax rate must be 50 percent.

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. What is total consumer surplus after the tax is levied?

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

The two types of taxes that are most important to state and local governments as sources of revenue are

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?

A budget surplus occurs when government receipts exceed government spending.

A mortgage interest deduction would be considered

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

Which of the following types of taxes achieves vertical equity: a proportional tax, regressive tax, and/or progressive tax?

Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000?