Question 1

The federal income tax is an example of a

Accepted Answer

A)  progressive tax.
B)  regressive tax.
C)  proportional tax.
D)  value-added tax.E) All of the above
F) A) and B)

Question 2

Since the end of World War II, corporate income taxes have accounted for

Accepted Answer

A)  an increasing share of federal revenue.
B)  a steady share of federal revenue.
C)  a declining share of federal revenue.
D)  a rising share of revenue until 1980, and then a falling share.E) A) and B)
F) A) and C)

Question 3

The payroll tax is the federal government's biggest source of revenue.

Accepted Answer

A) True 
 B)False

Question 4

Economists generally think that the ____ tax is among the best ways to raise revenue.

Accepted Answer

A)  property
B)  personal income
C)  sales
D)  value-addedE) A) and D)
F) C) and D)

Question 5

Employers can shift payroll taxes by substituting capital for labor.

Accepted Answer

A) True 
 B)False

Question 6

The notion that equally situated individuals should be taxed equally is referred to as

Accepted Answer

A)  horizontal equity.
B)  vertical equity.
C)  the benefits principle.
D)  the Gini principle.E) A) and B)
F) None of the above

Question 7

The major objective of the 1986 tax reform was to: (i)  enhance efficiency by lowering marginal tax rates; (ii)  enhance equity by closing "loopholes."

Accepted Answer

A)  i and ii
B)  i but not ii
C)  ii but not i
D)  neither i nor iiE) A) and B)
F) A) and C)

Question 8

The largest single source of revenue for the federal government is the

Accepted Answer

A)  corporate income tax.
B)  federal excise tax.
C)  personal income tax.
D)  Social Security tax.E) B) and D)
F) None of the above

Question 9

Explain whether or not the ability-to-pay principle of tax equity is consistent with the benefits received principle of taxation.

Accepted Answer

Ability-to-pay assesses a higher tax on ...

Question 10

If two families are equally situated except that one rents and the other owns their home, the existing tax system will lead to

Accepted Answer

A)  vertical inequity.
B)  equal treatment of both.
C)  horizontal inequity.
D)  equal burden sharing.E) All of the above
F) A) and B)

Question 11

Sometimes, the taxes with the smallest excess burden are:

Accepted Answer

A)  ​progressive
B)  ​regressive
C)  ​proportional
D)  ​digressiveE) B) and D)
F) B) and C)

Question 12

A head tax is

Accepted Answer

A)  always regressive.
B)  an indirect tax on the value of property.
C)  the primary tax used by U.S.municipalities to raise revenue.
D)  All of the above are correct.E) All of the above
F) None of the above

Question 13

Payments to Social Security recipients would decline if the retirement age were lowered.

Accepted Answer

A) True 
 B)False  False

Question 14

Indirect taxes are levied on specific economic activities.

Accepted Answer

A) True 
 B)False

Question 15

Loopholes have the effect of

Accepted Answer

A)  encouraging particular patterns of behavior and favoring particular types of people.
B)  eroding the progressivity of the income tax.
C)  altering the pattern of economic incentives.
D)  All of the above are correct.E) B) and D)
F) A) and D)

Question 16

Officially, the payroll tax is referred to as

Accepted Answer

A)  the trust fund tax.
B)  Social Security tax.
C)  contributions for social insurance.
D)  investment in Social Security.E) All of the above
F) A) and C)

Question 17

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 foodstuffs
C)  a personal income tax
D)  a state tax on football ticketsE) B) and D)
F) A) and D)

Question 18

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

Accepted Answer

A) True 
 B)False  True

Question 19

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) C) and D) A

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 17: Taxation and Resource Allocation

The federal income tax is an example of a

Correct AnswerverifiedShow Answer

Since the end of World War II, corporate income taxes have accounted for

Correct AnswerverifiedShow Answer

The payroll tax is the federal government's biggest source of revenue.

Correct AnswerverifiedShow Answer

Economists generally think that the ____ tax is among the best ways to raise revenue.

Correct AnswerverifiedShow Answer

Employers can shift payroll taxes by substituting capital for labor.

Correct AnswerverifiedShow Answer

The notion that equally situated individuals should be taxed equally is referred to as

Correct AnswerverifiedShow Answer

The major objective of the 1986 tax reform was to: (i) enhance efficiency by lowering marginal tax rates; (ii) enhance equity by closing "loopholes."

Correct AnswerverifiedShow Answer

The largest single source of revenue for the federal government is the

Correct AnswerverifiedShow Answer

Explain whether or not the ability-to-pay principle of tax equity is consistent with the benefits received principle of taxation.

Correct AnswerverifiedAbility-to-pay assesses a higher tax on ...View AnswerShow Answer

If two families are equally situated except that one rents and the other owns their home, the existing tax system will lead to

Correct AnswerverifiedShow Answer

Sometimes, the taxes with the smallest excess burden are:

Correct AnswerverifiedShow Answer

A head tax is

Correct AnswerverifiedShow Answer

Payments to Social Security recipients would decline if the retirement age were lowered.

Correct AnswerverifiedFalse

Indirect taxes are levied on specific economic activities.

Correct AnswerverifiedShow Answer

Loopholes have the effect of

Correct AnswerverifiedShow Answer

Officially, the payroll tax is referred to as

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

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 AnswerverifiedA

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

Correct AnswerverifiedShow Answer

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Ability-to-pay assesses a higher tax on ...
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False

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True

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A

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