Question 1

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Accepted Answer

A) True 
 B)False

Question 2

Corporate profits distributed as dividends are

Accepted Answer

A)   tax free.
B)   taxed once.
C)   taxed twice.
D)   taxed three times.E) None of the above
F) A) and D)

Question 3

Table 12-17
The dollar amounts in the last three columns are the taxes owed under the three different tax systems.
 
-Refer to Table 12-17.Which of the three tax systems is progressive?

Accepted Answer

A)   Tax System A
B)   Tax System B
C)   Tax System C
D)   None of the systems are progressive.E) C) and D)
F) A) and B)

Question 4

The most efficient tax possible is a

Accepted Answer

A)   lump-sum tax.
B)   marginal tax.
C)   proportional tax.
D)   value-added tax.E) All of the above
F) C) and D)

Question 5

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Accepted Answer

A) True 
 B)False

Question 6

Maurice 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.Maurice earns $60,000 per year in salary and another $10,000 per year in non-labor income.What is his average tax rate?

Accepted Answer

A)   17.19 percent
B)   46.69 percent
C)   48.87 percent
D)   56.01 percentE) None of the above
F) A) and B)

Question 7

Table 12-12
United States Income Tax Rates for a Single Individual, 2009 and 2010.
 
-Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Accepted Answer

A)   It increased.
B)   It decreased.
C)   It did not change.
D)   We do not have enough information to answer this question.E) None of the above
F) All of the above

Question 8

Table 12-10
The following table shows the marginal tax rates for unmarried individuals for two years.
 
-Refer to Table 12-10.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 D)
F) A) and B)

Question 9

A tax imposed at every stage of production is a

Accepted Answer

A)   value-added tax.
B)   lump sum tax.
C)   corrective tax.
D)   regressive tax.E) B) and C)
F) All of the above

Question 10

Which of the following is an example of an excise tax?

Accepted Answer

A)   a tax on the wages that a firm pays its workers
B)   a tax on tobacco
C)   a tax on corporate profits
D)   the portion of federal income taxes earmarked to pay for Social Security and MedicareE) A) and D)
F) A) and C)

Question 11

Table 12-7
 
-Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Accepted Answer

A)   20%
B)   23%
C)   40%
D)   45%E) B) and D)
F) A) and B)

Question 12

Two families who live in Plains,GA have identical incomes.The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year.The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies

Accepted Answer

A)   an application of the benefits principle of taxation.
B)   a violation of horizontal equity.
C)   a violation of vertical equity.
D)   an application of egalitarian tax rules.E) B) and D)
F) None of the above

Question 13

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Accepted Answer

A)   national defense and income security (welfare)  programs
B)   national defense and Medicare
C)   Social Security and public schools
D)   Social Security and MedicareE) B) and D)
F) All of the above

Question 14

The amount of income tax owed by a family is

Accepted Answer

A)   not simply proportional to its total income.
B)   unaffected by deductions.
C)   total income minus tax credits.
D)   a constant fraction of income.E) A) and B)
F) B) and C)

Question 15

Total taxes paid divided by total income is called the

Accepted Answer

A)   lump-sum tax liability.
B)   marginal tax rate.
C)   average tax rate.
D)   average consumption tax liability.E) A) and B)
F) A) and C)

Question 16

The U.S.federal government collects about

Accepted Answer

A)   one-third of the taxes in our economy.
B)   one-half of the taxes in our economy.
C)   two-thirds of the taxes in our economy.
D)   three-fourths of the taxes in our economy.E) A) and C)
F) A) and D)

Question 17

In 2009,the U.S.federal government collected approximately how much in total tax receipts?

Accepted Answer

A)   $307 million
B)   $2.1 billion
C)   $3.2 billion
D)   $6.8 billionE) A) and B)
F) A) and D)

Question 18

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Accepted Answer

A)   10%
B)   40%
C)   50%
D)   67%E) None of the above
F) A) and D)

Question 19

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Accepted Answer

A) True 
 B)False

Question 20

The federal budget deficit in 2009 was nearly eight times larger than the deficit in 2007.The primary reason for the dramatic increase in the deficit was

Accepted Answer

A)   the recession experienced during this time.
B)   severe budget tightening by members of Congress.
C)   the shift in political power from Republicans to Democrats.
D)   All of the above are correct.E) A) and D)
F) B) and C)

Exam 12: The Design of the Tax System.

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Correct Answer
verified

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.Which of the following best describes the tax schedule in 2009?

Correct Answer
verified

Two families who live in Plains,GA have identical incomes.The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year.The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies

Correct Answer
verified

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct Answer
verified

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Correct Answer
verified

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct Answer
verified

Which of the following is an example of an excise tax?

Correct Answer
verified

A tax imposed at every stage of production is a

Correct Answer
verified

The U.S.federal government collects about

Correct Answer
verified

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Correct Answer
verified

In 2009,the U.S.federal government collected approximately how much in total tax receipts?

Correct Answer
verified

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Correct Answer
verified

Total taxes paid divided by total income is called the

Correct Answer
verified

The federal budget deficit in 2009 was nearly eight times larger than the deficit in 2007.The primary reason for the dramatic increase in the deficit was

Correct Answer
verified

The amount of income tax owed by a family is

Correct Answer
verified

Table 12-17 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-17.Which of the three tax systems is progressive?

Correct Answer
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Correct Answer
verified

Corporate profits distributed as dividends are

Correct Answer
verified

The most efficient tax possible is a

Correct Answer
verified

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Correct Answer
verified

Exam 12: The Design of the Tax System.

Table 12-12 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-12.Mia is a single person whose taxable income is $100,000 a year.What happened to her marginal tax rate between 2009 and 2010?

Correct AnswerverifiedShow Answer

Table 12-10 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-10.Which of the following best describes the tax schedule in 2009?

Correct AnswerverifiedShow Answer

Two families who live in Plains,GA have identical incomes.The Smiths deduct $5,000 from their taxable income for mortgage interest paid during the year.The Jones family lives in an apartment and is not eligible for a mortgage-interest deduction.This situation exemplifies

Correct AnswerverifiedShow Answer

Vertical equity refers to a tax system in which individuals with higher incomes pay more in taxes than individuals with lower incomes.

Correct AnswerverifiedShow Answer

The revenue that the federal government collects from payroll taxes is earmarked to pay for

Correct AnswerverifiedShow Answer

The equity of a tax system concerns whether the tax burden is distributed equally among the population.

Correct AnswerverifiedShow Answer

Which of the following is an example of an excise tax?

Correct AnswerverifiedShow Answer

A tax imposed at every stage of production is a

Correct AnswerverifiedShow Answer

The U.S.federal government collects about

Correct AnswerverifiedShow Answer

To fully understand the progressivity of government policies,one should only look at the proportion of total income that individuals pay in taxes each year.

Correct AnswerverifiedShow Answer

In 2009,the U.S.federal government collected approximately how much in total tax receipts?

Correct AnswerverifiedShow Answer

The U.S.federal government collects approximately what percentage of the taxes in the economy?

Correct AnswerverifiedShow Answer

Total taxes paid divided by total income is called the

Correct AnswerverifiedShow Answer

The federal budget deficit in 2009 was nearly eight times larger than the deficit in 2007.The primary reason for the dramatic increase in the deficit was

Correct AnswerverifiedShow Answer

The amount of income tax owed by a family is

Correct AnswerverifiedShow Answer

Table 12-17 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-17.Which of the three tax systems is progressive?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Corporate profits distributed as dividends are

Correct AnswerverifiedShow Answer

The most efficient tax possible is a

Correct AnswerverifiedShow Answer

Table 12-7 -Refer to Table 12-7.What is the marginal tax rate for a person who makes $60,000?

Correct AnswerverifiedShow Answer

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