Question 1

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $50,000 a year?

Accepted Answer

To calculate the income tax for someone earning $50,000 a year under the given flat tax plan:
- First, deduct the standard allowance of $25,000 from their wages: $50,000 - $25,000 = $25,000
- Multiply the remaining income by the flat tax rate of 12%: $25,000 x 0.12 = $3,000

Therefore, the correct answer is C) $3,000.

Question 2

The U.S. federal government relies more heavily on ____ than any other government.

Accepted Answer

The U.S. federal government relies more heavily on income-based taxes such as the individual income tax and the corporate income tax than any other government. According to the OECD, in 2019, income taxes accounted for around 50% of U.S. government revenue, compared to an OECD average of 24%.

Question 3

Which of the following is generally considered the most regressive type of tax?

Accepted Answer

Excise taxes are considered regressive because they take a larger percentage of income from low-income individuals than from high-income individuals, as they are applied uniformly to all consumers regardless of their income level.

Question 4

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. Above $25,000 in wages, the average tax rate:

Accepted Answer

The average tax rate increases with income because the fixed deduction means a larger portion of income is taxed as income rises, increasing the average rate.

Question 5

Which of the following accounted for the highest percentage of federal government spending in 2013?

Accepted Answer

In 2013, income security, which includes Social Security, unemployment benefits, and other welfare programs, accounted for the highest percentage of federal government spending.

Question 6

Which of the following is an example of a progressive tax?

Accepted Answer

A progressive tax is a tax where the percentage of income paid in taxes increases as income increases. The federal income tax is an example of a progressive tax because higher income earners pay a higher percentage of their income in taxes compared to lower income earners.

Question 7

If Jim earns $300,000 this year and pays $75,000 in taxes and Sharon earns $80,000 this year and pays $20,000 in taxes, this tax system would appear to be

Accepted Answer

Both Jim and Sharon are paying 25% of their earnings in taxes, which indicates a proportional tax system where the tax rate is the same regardless of income level.

Question 8

A regressive tax:

Accepted Answer

A regressive tax is designed to take a greater proportion of the income of lower-income groups than of higher-income groups. It means that lower-income taxpayers pay a higher percentage of their income towards taxes compared to higher-income taxpayers, making it a more burdensome tax for them.

Question 9

The ability to pay principle suggests that:

Accepted Answer

The ability to pay principle holds that those with higher incomes or greater wealth should pay a greater proportion of their income or wealth in taxes than those with lower incomes or less wealth. This recognizes the idea that those who have more have a greater ability to contribute to society and support public services through taxation. This principle is generally accepted in modern tax systems as a way to promote equity and fairness.

Question 10

A progressive tax:

Accepted Answer

A progressive tax is designed to take a larger percentage of higher incomes as compared to lower incomes. As the income of an individual or household increases, the tax rate also increases, resulting in a higher tax burden for those with higher incomes. This system is intended to create a more equitable distribution of tax burdens across income levels.

Question 11

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. If you were earning $100,000 a year, your average tax rate would be:

Accepted Answer

Under the flat tax plan described, you would deduct the standard allowance of $25,000 from your wages, leaving $75,000 taxable. At a 12% tax rate, you would pay $9,000 in taxes ($75,000 * 12%). To find the average tax rate, divide the tax paid by your total earnings: $9,000 / $100,000 = 9%.

Question 12

A flat tax:

Accepted Answer

A flat tax is designed so that everybody would be charged the same percentage of their income. Therefore, choice C is the correct option. Option A is incorrect because a flat tax would mean that everyone is charged the same percentage of their income, not the same number of dollars. Option B is incorrect because a flat tax system is not designed to have a decreasing tax rate as income increases. Option D is incorrect because a flat tax system charges the same percentage of income for everyone, regardless of their income level.

Question 13

Which of the following accounts for the largest percentage of federal taxes?

Accepted Answer

Individual income taxes account for the largest percentage of federal taxes, contributing about 50% of total federal tax revenue. Social security tax and corporate income tax account for a smaller percentage of federal taxes, with gift taxes being a very small portion.

Question 14

Which of the following is potentially an option to save Social Security?

Accepted Answer

All of the above options are potentially viable solutions to help save Social Security. Increasing the payroll tax rate would generate more revenue for the program, increasing the age required for full-time benefits would reduce the number of beneficiaries and their longevity on the program, and implementing means testing would ensure that only those who truly need Social Security benefits receive them. However, the best choice may depend on various factors and require a combination of different solutions.

Question 15

If Stephen earns $100,000 this year and pays $20,000 in taxes and Chris earns $50,000 this year and pays $5,000 in taxes, this tax system would appear to be

Accepted Answer

This tax system is progressive because the higher income earner, Stephen, pays a higher percentage of his income in taxes (20%) compared to Chris, who pays a lower percentage (10%). In a progressive tax system, the tax rate increases as the taxable amount increases.

Question 16

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $100,000 a year?

Accepted Answer

First, subtract the standard allowance from the total income: $100,000 - $25,000 = $75,000. Then, apply the 12% tax rate: $75,000 * 0.12 = $9,000.

Question 17

Which of the following accounted for the highest percentage of state and local spending?

Accepted Answer

Education and health care tend to account for the highest percentage of state and local spending. These sectors require significant investments to maintain and improve services, and therefore tend to receive more funding than other areas such as police and fire protection or highways. Social security is typically funded at the federal level, rather than through state and local spending.

Question 18

Which of the following is not an option that could be used to save Social Security?

Accepted Answer

Decreasing the age required for full benefits would actually increase the financial strain on Social Security by allowing more people to draw benefits sooner, rather than saving the system.

Question 19

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. If you were earning $50,000 a year, your average tax rate would be:

Accepted Answer

The taxable income is $50,000 - $25,000 = $25,000. The tax owed is 12% of $25,000, which is $3,000. The average tax rate is $3,000 / $50,000 = 6%.

Question 20

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $20,000 a year?

Accepted Answer

Since the individual earns $20,000, which is less than the standard allowance of $25,000, their taxable income would be $0, resulting in no income tax due.

Quiz 9: Public Finance and Public Choice

​Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $50,000 a year?

The U.S. federal government relies more heavily on ____ than any other government.

Which of the following is generally considered the most regressive type of tax?

​Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. Above $25,000 in wages, the average tax rate:

Which of the following accounted for the highest percentage of federal government spending in 2013?

Which of the following is an example of a progressive tax?

If Jim earns $300,000 this year and pays $75,000 in taxes and Sharon earns $80,000 this year and pays $20,000 in taxes, this tax system would appear to be

A regressive tax:

The ability to pay principle suggests that:

A progressive tax:

​Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. If you were earning $100,000 a year, your average tax rate would be:

A flat tax:

Which of the following accounts for the largest percentage of federal taxes?

Which of the following is potentially an option to save Social Security?

If Stephen earns $100,000 this year and pays $20,000 in taxes and Chris earns $50,000 this year and pays $5,000 in taxes, this tax system would appear to be

​Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $100,000 a year?

Which of the following accounted for the highest percentage of state and local spending?

Which of the following is not an option that could be used to save Social Security?

​Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. If you were earning $50,000 a year, your average tax rate would be:

​Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $20,000 a year?

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $50,000 a year?

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. Above $25,000 in wages, the average tax rate:

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. If you were earning $100,000 a year, your average tax rate would be:

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $100,000 a year?

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. If you were earning $50,000 a year, your average tax rate would be:

Exhibit 9-1 A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%. -Refer to Exhibit 9-1. How much income tax would you have to pay if you were earning $20,000 a year?