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Exam 12: The Design of the Tax System

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Question 111

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Table 12-10 -Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her marginal tax rate is

A) 15%.
B) 25%.
C) 28%.
D) 33%.

E) All of the above
F) B) and C)

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Question 112

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Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Jake is a single person whose taxable income is $20,000 a year. What is his average tax rate in 2012?

A) 10%
B) 12.5%
C) 15%
D) 28%

E) All of the above
F) C) and D)

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Question 113

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The theory that the wealthy should contribute more to police protection than the poor because they have more to protect is based on

One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.

Table 12-22 -Refer to Table 12-22. A regressive tax is illustrated by tax

Table 12-7 The following table shows the marginal tax rates for unmarried individuals for two years. -Refer to Table 12-7. For an individual who earned $35,000 in taxable income in both years, which of the following describes the change in the individual's marginal tax rate between the two years?

Suppose a recent increase in federal gasoline taxes is estimated to cause a $150 million reduction in the total surplus (consumer plus producer surplus) in the gasoline market. If tax revenues increased by $100 million, what is the deadweight loss associated with the tax? As a result of the tax, 10,000 people sold their cars and started riding their bicycles to work. How much of the burden of the deadweight loss is incurred by the bicycle riders?

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?

Sales taxes generate nearly 50% of the tax revenue for state and local governments.

Table 12-19 -The most efficient tax possible is a

An advantage of a consumption tax is that it does not distort the incentive to save.

An efficient tax system is one that (i) Maximizes tax revenues. (ii) Minimizes deadweight losses from taxes. (iii) Minimizes administrative burdens from taxes. (iv) Promotes equity across taxpayers.

If the government imposes a tax of $3,000 on everyone, the tax would be a(n)

Table 12-25 -Refer to Table 12-25. Which plan illustrates a progressive 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?

Which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?

Table 12-5 -Refer to Table 12-5. What is the average tax rate for a person who makes $120,000?

Table 12-9 United States Income Tax Rates for a Single Individual, 2012 and 2013. -Refer to Table 12-9. Bill is a single person whose taxable income is $35,000 a year. What is his average tax rate in 2012?

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Lump-sum taxes are equitable but not efficient.