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Exam 12: The Design of the Tax System

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Question 141

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The U.S. federal government collects about

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 D)
F) A) and C)

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Question 142

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Table 12-11 -Refer to Table 12-11. If Bud has taxable income of $78,000, his average tax rate is

A) 18.7%.
B) 19.3%.
C) 20.1%.
D) 34.0%.

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

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Question 143

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If all taxpayers pay the same percentage of income in taxes, the tax system is progressive.

Table 12-21 The dollar amounts in the last three columns are the taxes owed under the three different tax systems. -Refer to Table 12-21. Which of the three tax systems is regressive?

In 2009, the top 1 percent of income earners

James earns income of $90,000 per year. His average tax rate is 40percent. James paid $5,500 in taxes on the first $40,000 he earned. What was the marginal tax rate on the rest of his income?

The concept that people should pay taxes based on the benefits they receive from government services is called

The two taxes that together provide the U.S. federal government with almost 80 percent of its revenue are

A budget deficit occurs when government receipts exceed government spending.

Alan Greenspan, former Chairman of the Federal Reserve, discussed the advantages of which kind of tax system, "particularly if one were designing a tax system from scratch"?

Suppose that Kara values a hot fudge sundae at $6 and Stacia values one at $5. The pretax price of a hot fudge sundae is $3. The government imposes a $1 tax on hot fudge sundaes, which raises the price to $4. What is the deadweight loss from the tax?

Some colleges charge all students the same fee for access to campus computing services. Suppose that students differ by how many hours of campus computing services they use. For example, some students print all their papers and assignment in the campus computer labs, while others use their own printers in their apartments. The computing services fee is most like a(n)

Vertical equity is not consistent with a regressive tax structure.

Today the typical American pays approximately what percent of income in taxes, including all federal, state, and local taxes?

Table 12-18 United States Income Tax Rates for a Single Individual, 2009 and 2010. -Refer to Table 12-18. What type of tax structure does the United States have in 2010 for single individuals?

List the three most important expenditure programs of the federal government. How do they differ from the three most important expenditure programs of state and local governments? Explain why it makes more sense for the federal government to purchase "national defense" rather than state governments.

What is the current, annual, approximate amount per person paid to the federal government in individual income taxes, social insurance taxes, corporate income taxes, and other taxes?

Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000. Calculate the marginal tax rate and the average tax rate for a person who earns $70,000.

Government spending is projected to rise over the next few decades. Three of the most important reasons are spending on Social Security, Medicare, and healthcare.

One reason that deadweight losses are so difficult to avoid is that