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Exam 12: The Design of the Tax System

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Question 271

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Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax B exhibits

A) horizontal and vertical equity.
B) horizontal equity but not vertical equity.
C) vertical equity but not horizontal equity.
D) neither horizontal nor vertical equity.

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

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Question 272

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The U.S. tax burden is high compared to many European countries..

A) True
B) False

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Question 273

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Pat calculates that for every extra dollar she earns, she owes the government 40 cents. Her total income now is $44,000, on which she pays taxes of $11,000. Determine her average tax rate and her marginal tax rate.

Scenario 12-2 Suppose that Bob places a value of $10 on a movie ticket and that Lisa places a value of $7 on a movie ticket. In addition, suppose the price of a movie ticket is $5. -Refer to Scenario 12-2. What is total consumer surplus for Bob and Lisa?

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. Because total consumer surplus has

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

In the United States, the marginal tax rate on individual federal income tax

You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) two people with the same total income would pay taxes of the same amount, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following tax systems could achieve both goals?

The resources that a taxpayer devotes to complying with the tax laws are a type of

Tax evasion is legal, but tax avoidance is illegal.

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

Sue earns income of $80,000 per year. Her average tax rate is 30 percent. Sue paid 20 percent in taxes on the first $30,000 she earned. What was the marginal tax rate on the rest of her income?

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

A lump-sum tax would take different amounts from the poor and the rich.

Suppose Darby values a certain smart phone at $400. Jake values the same smart phone at $300. The pre-tax price of this smart phone is $250. The government imposes a tax of $75 on each smart phone, and the price rises to $325. The deadweight loss from the tax is

In 1950 there were approximately 7 working age people for every elderly person; however, in 2050 there will be

Table 12-13 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. -Refer to Table 12-13. In this economy Tax A exhibits

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

Table 12-11 -Refer to Table 12-11. If Al has taxable income of $165,000, his average tax rate is

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