Question 1

Most loopholes in the income tax system

Accepted Answer

A)  are more likely to be exploited by the wealthy.
B)  make it more progressive.
C)  were created by the tax reforms instituted in 1986.
D)  do not affect the economic decisions of the people who benefit from them.E) A) and B)
F) A) and C)

Question 2

Figure 18-3 
-In 1984, the South Carolina State Supreme Court ruled that a 20 percent admission tax on X-rated movies was unconstitutional.When the affected cinemas sought a refund of collected taxes, they were denied on the grounds that the tax, although collected by the theater, was indeed paid by the theatergoers.The Supreme Court apparently believed

Accepted Answer

A)  the supply of X-rated movies was perfectly elastic.
B)  the demand for X-rated movies was perfectly inelastic.
C)  the legislation intended that the theatergoers pay the tax.
D)  the burden fell on the theatergoers-there are no excess burdens on the theater.E) B) and D)
F) A) and B)

Question 3

In the area of taxation, the trade-off between equity and efficiency

Accepted Answer

A)  never occurs since efficient taxes are often the most progressive.
B)  is relevant as efficient taxes are often regressive.
C)  is irrelevant.
D)  is relevant because efficient taxes are often progressive.E) C) and D)
F) A) and B)

Question 4

Federal, state, and local taxes

Accepted Answer

A)  have been falling as a share of GDP since the 1970s.
B)  have been increasing as a share of GDP since the 1970s.
C)  are about a quarter of GDP.
D)  are about one-third of GDP.E) A) and B)
F) B) and C)

Question 5

If Hermione pays $10.00 in taxes on $100 of income and $10.25 on $101 of income, which of the following is not true?

Accepted Answer

A)  Her marginal tax rate at $100 is 25 percent.
B)  Her average tax rate at $100 is 10 percent.
C)  She faces a progressive tax.
D)  Her marginal tax rate at $100 is 10.25 percent.E) A) and B)
F) A) and C)

Question 6

What is the controversy surrounding property taxes as a source for school funding?

Accepted Answer

The controversy behind school funding ap...

Question 7

Vertical equity refers to the notion that equally situated individuals should be taxed equally.

Accepted Answer

A) True 
 B)False

Question 8

Social Security benefits funded by from dividends from the Social Security Trust Fund.

Accepted Answer

A) True 
 B)False

Question 9

The second largest source of income for the federal budget is

Accepted Answer

A)  personal income taxes.
B)  corporate income taxes.
C)  payroll taxes.
D)  inheritance taxes.E) B) and C)
F) A) and B)

Question 10

Faced with a shortage of funds to pay claims, the workman's compensation systems in many states have been forced to raise the workman's compensation tax rate substantially.The tax is paid by employers.Employers have complained that they cannot afford the tax and threaten to go out of business.Assuming the supply of labor is very inelastic, one can argue that ultimately the burden of this tax actually will rest

Accepted Answer

A)  mostly on workers.
B)  mostly on employers.
C)  about 50/50 on workers and employers, like the Social Security tax.
D)  all on employers by statute.E) A) and C)
F) None of the above

Question 11

Which of the following taxes is least likely to be shifted?

Accepted Answer

A)  A federal excise tax on grapefruit
B)  A sales tax on some foodstuff
C)  A personal income tax
D)  A state tax on football ticketsE) A) and D)
F) A) and C)

Question 12

A regressive tax is one in which the average tax rate falls as income rises.

Accepted Answer

A) True 
 B)False

Question 13

In 2005, the median income of renters was $26,317 and the median income of homeowners was $50,505.If imputed rent were added to household income or rent became deductible, the personal income tax would become

Accepted Answer

A)  more progressive.
B)  more regressive.
C)  about proportional.
D)  less progressive.E) All of the above
F) A) and B)

Question 14

One major tax loophole intended to help state & local governments raise funds is

Accepted Answer

A)  fiscal federalism.
B)  tax exempt municipal bond interest.
C)  tax deductible mortgage interest.
D)  tax credits for solar panels.E) A) and D)
F) A) and B)

Question 15

The incidence of a payroll tax is borne by both employers and employees.

Accepted Answer

A) True 
 B)False

Question 16

Since World War II, the share of corporate income tax collections in total federal revenue has been

Accepted Answer

A)  increasing rapidly.
B)  declining rapidly.
C)  increasing slowly.
D)  declining generally.E) A) and B)
F) B) and C)

Question 17

If Bob is taxed for each soda he buys, he faces a direct tax.

Accepted Answer

A) True 
 B)False

Question 18

The way in which most persons pay their personal income tax is in the form of

Accepted Answer

A)  quarterly payments throughout the year.
B)  annual payment by April 15.
C)  monthly payments as part of mortgage payments.
D)  payroll withholding during the year.E) All of the above
F) B) and D)

Question 19

If a corporation earns $1 million in revenues on $750,000 in expenses, including $415,000 from payrolls, and the corporate tax rate is 10 percent with a $100,000 exemption, then the corporate taxes would be

Accepted Answer

A)  $90,000.
B)  $31,000.
C)  $25,000.
D)  $15,000.E) A) and B)
F) A) and C)

Question 20

The main difference between direct and indirect taxes is that

Accepted Answer

A)  indirect taxes are automatically deducted from workers' paychecks and direct taxes are not.
B)  direct taxes are paid to state and local governments and indirect taxes are paid to the federal government.
C)  direct taxes are taxes levied on people and indirect taxes are taxes levied on activities undertaken by people.
D)  direct taxes are usually proportional and indirect taxes are usually progressive.E) B) and C)
F) C) and D)

Exam 17: Taxation and Resource Allocation

A regressive tax is one in which the average tax rate falls as income rises.

Correct Answer
verified

Federal, state, and local taxes

Correct Answer
verified

In the area of taxation, the trade-off between equity and efficiency

Correct Answer
verified

Social Security benefits funded by from dividends from the Social Security Trust Fund.

Correct Answer
verified

Vertical equity refers to the notion that equally situated individuals should be taxed equally.

Correct Answer
verified

Correct Answer
verified

What is the controversy surrounding property taxes as a source for school funding?

Correct Answer
verified
The controversy behind school funding ap...
View Answer

Most loopholes in the income tax system

Correct Answer
verified

The second largest source of income for the federal budget is

Correct Answer
verified

The main difference between direct and indirect taxes is that

Correct Answer
verified

If a corporation earns $1 million in revenues on $750,000 in expenses, including $415,000 from payrolls, and the corporate tax rate is 10 percent with a $100,000 exemption, then the corporate taxes would be

Correct Answer
verified

If Hermione pays $10.00 in taxes on $100 of income and $10.25 on $101 of income, which of the following is not true?

Correct Answer
verified

One major tax loophole intended to help state & local governments raise funds is

Correct Answer
verified

Which of the following taxes is least likely to be shifted?

Correct Answer
verified

The way in which most persons pay their personal income tax is in the form of

Correct Answer
verified

If Bob is taxed for each soda he buys, he faces a direct tax.

Correct Answer
verified

Correct Answer
verified

In 2005, the median income of renters was $26,317 and the median income of homeowners was $50,505.If imputed rent were added to household income or rent became deductible, the personal income tax would become

Correct Answer
verified

The incidence of a payroll tax is borne by both employers and employees.

Correct Answer
verified

Since World War II, the share of corporate income tax collections in total federal revenue has been

Correct Answer
verified

Exam 17: Taxation and Resource Allocation

A regressive tax is one in which the average tax rate falls as income rises.

Correct AnswerverifiedShow Answer

Federal, state, and local taxes

Correct AnswerverifiedShow Answer

In the area of taxation, the trade-off between equity and efficiency

Correct AnswerverifiedShow Answer

Social Security benefits funded by from dividends from the Social Security Trust Fund.

Correct AnswerverifiedShow Answer

Vertical equity refers to the notion that equally situated individuals should be taxed equally.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

What is the controversy surrounding property taxes as a source for school funding?

Correct AnswerverifiedThe controversy behind school funding ap...View AnswerShow Answer

Most loopholes in the income tax system

Correct AnswerverifiedShow Answer

The second largest source of income for the federal budget is

Correct AnswerverifiedShow Answer

The main difference between direct and indirect taxes is that

Correct AnswerverifiedShow Answer

If a corporation earns $1 million in revenues on $750,000 in expenses, including $415,000 from payrolls, and the corporate tax rate is 10 percent with a $100,000 exemption, then the corporate taxes would be

Correct AnswerverifiedShow Answer

If Hermione pays $10.00 in taxes on $100 of income and $10.25 on $101 of income, which of the following is not true?

Correct AnswerverifiedShow Answer

One major tax loophole intended to help state & local governments raise funds is

Correct AnswerverifiedShow Answer

Which of the following taxes is least likely to be shifted?

Correct AnswerverifiedShow Answer

The way in which most persons pay their personal income tax is in the form of

Correct AnswerverifiedShow Answer

If Bob is taxed for each soda he buys, he faces a direct tax.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In 2005, the median income of renters was $26,317 and the median income of homeowners was $50,505.If imputed rent were added to household income or rent became deductible, the personal income tax would become

Correct AnswerverifiedShow Answer

The incidence of a payroll tax is borne by both employers and employees.

Correct AnswerverifiedShow Answer

Since World War II, the share of corporate income tax collections in total federal revenue has been

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The controversy behind school funding ap...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified