Deck 12: The Design of the Tax System.

Question 1

Over the past 100 years,as the U.S.economy's income has grown,

A) tax rates have decreased, while tax revenues have increased.
B) tax rates have increased, while tax revenues have decreased.
C) both tax rates and tax revenues have increased.
D) both tax rates and tax revenues have decreased.

Answer 1

C

Question 2

As a nation gets richer,the government typically takes

A) a constant share of income in taxes.
B) a smaller share of income in taxes.
C) a larger share of income in taxes.
D) There is little evidence of a relationship between income and taxes for most countries.

Answer 2

C

Question 3

From the time of Benjamin Franklin to the present,the percentage of the average American's income that goes to pay taxes

A) has decreased from about 20 percent to about 10 percent.
B) has remained constant at about 10 percent.
C) has risen from less than 2 percent to about 44.4 percent.
D) has risen from less than 5 percent to about 33.3 percent.

Answer 3

D

Question 4

In 2009,the average American paid approximately how much to the federal government in taxes?

A) $1,900
B) $4,500
C) $6,800
D) $8,500

Question 5

Which of the following statements is not correct?

A) The U.S. tax burden is high compared to many poor countries.
B) As nations get richer, their governments typically collect a smaller share of income in taxes.
C) The U.S. has a higher federal tax burden than China and India.
D) The U.S. tax burden is low compared to many European countries.

Question 6

Of the following countries,which country's government collects the largest amount of tax revenue as a percentage of that country's total income?

A) France
B) United States
C) Canada
D) Sweden

Question 7

The U.S.federal government collects about

A) one-third of the taxes in our economy.
B) one-half of the taxes in our economy.
C) two-thirds of the taxes in our economy.
D) three-fourths of the taxes in our economy.

Question 8

Of the following countries,which country's government collects the least amount of tax revenue as a percentage of that country's total income?

A) France
B) United States
C) Canada
D) Sweden

Question 9

Today the typical American pays approximately what percent of income in taxes,including all federal,state,and local taxes?

A) 5 percent
B) 18 percent
C) 33 percent
D) 50 percent

Question 10

The U.S.tax burden is

A) about the same as most European countries.
B) higher than most European countries.
C) lower than most European countries.
D) higher than all European countries.

Question 11

In 1789,the average American paid approximately what percent of income in taxes?

A) 5%
B) 15%
C) 33%
D) 50%

Question 12

The U.S.federal government collects approximately what percentage of the taxes in the economy?

A) 10%
B) 40%
C) 50%
D) 67%

Question 13

Which of the following statements is correct?

A) The U.S. federal government collected a higher percentage of income in taxes in the early 1900s than in the early 2000s.
B) The U.S. federal government collects a higher percentage of income in taxes than many European countries, including France and Germany.
C) The U.S. federal government collects a lower percentage of income in taxes than many developing countries, including Mexico and India.
D) The U.S. federal government collects a similar percentage of income in taxes as Brazil and Japan.

Question 14

Which of the following countries has the largest tax burden?

A) Brazil
B) Germany
C) United States
D) Sweden

Question 15

When compared to nonpoor countries,poor countries usually have

A) very high tax burdens.
B) similar tax burdens.
C) relatively low tax burdens.
D) no taxes because of high poverty levels.

Question 16

Which of the following statements is correct?

A) Equity is more important than efficiency as a goal of the tax system.
B) Efficiency is more important than equity as a goal of the tax system.
C) Both equity and efficiency are important goals of the tax system.
D) Neither equity nor efficiency is an important goal of the tax system.

Question 17

Who observed that "in this world nothing is certain but death and taxes"?

A) Mark Twain
B) P.T. Barnum
C) Ben Franklin
D) Richard Nixon

Question 18

In 1789 the percentage of the average American's income that went to pay taxes was about

A) 5%. Today it is about 33%.
B) 5%. Today it is about 50%.
C) 33%. Today it is about 33%.
D) 33%. Today it is about 50%.

Question 19

Citizens expect the government to provide various goods and services making taxes

A) inefficient.
B) equitable.
C) inevitable.
D) intolerable.

Question 20

Which of the following is true about the percent of total income all levels of government in the U.S.take as taxes?

A) In 1902 the government collected about 7 percent of total income. In recent years, it collected about 30 percent of total income.
B) In 1902 the government collected about 30 percent of total income. In recent years, it collected about 7 percent of total income.
C) In 1902 the government collected about 7 percent of total income. In recent years, it collected about 7 percent of total income.
D) In 1902 the government collected about 30 percent of total income. In recent years, it collected about 30 percent of total income.

Question 21

Table 12-1

Refer to Table 12-1.If Agatha has $80,000 in taxable income,her marginal tax rate is

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

Question 22

The largest source of income for the federal government is

A) individual income taxes.
B) corporate taxes.
C) tariffs.
D) "sin" taxes on alcohol and cigarettes.

Question 23

In 2009,approximately what percentage of federal government receipts came from individual income taxes?

A) 15%
B) 30%
C) 43%
D) 60%

Question 24

Table 12-1

Refer to Table 12-1.If Betina has $170,000 in taxable income,her average tax rate is

A) 23.8%.
B) 24.3%.
C) 25.9%.
D) 28.0%.

Question 25

Table 12-1

Refer to Table 12-1.If Agatha has $80,000 in taxable income,her tax liability is

A) $11,581.
B) $16,181.
C) $20,000.
D) $24,881.

Question 26

Table 12-1

Refer to Table 12-1.If Damian has $33,000 in taxable income,his average tax rate is

A) 13.7%.
B) 14.6%.
C) 15.0%.
D) 15.2%.

Question 27

The two taxes that together provide the U.S.federal government with approximately 85 percent of its revenue are

A) individual income taxes and property taxes.
B) individual income taxes and corporate income taxes.
C) individual income taxes and payroll taxes.
D) sales taxes and payroll taxes.

Question 28

Table 12-1

Refer to Table 12-1.If Betina has $170,000 in taxable income,her marginal tax rate is

A) 25%.
B) 28%.
C) 33%.
D) 35%.

Question 29

The amount of income tax owed by a family is

A) not simply proportional to its total income.
B) unaffected by deductions.
C) total income minus tax credits.
D) a constant fraction of income.

Question 30

The largest source of revenue for the federal government is the

A) individual income tax.
B) property tax.
C) sales tax.
D) corporate income tax.

Question 31

Table 12-1

Refer to Table 12-1.If Betina has $170,000 in taxable income,her tax liability will be

A) $16,781.
B) $41,309.
C) $41,827.
D) $47,600.

Question 32

Approximately what percentage of the U.S.federal government's receipts come from individual income taxes?

A) 8%
B) 15%
C) 43%
D) 67%

Question 33

The federal taxes owed by a taxpayer depend

A) only upon the marginal tax rate on the taxpayer's first $25,000 of income.
B) only upon the marginal tax rate on the taxpayer's last $10,000 of income.
C) upon all the marginal tax rates up to the taxpayer's overall level of income.
D) upon all the marginal tax rates, including those for income levels that exceed the taxpayer's overall level of income.

Question 34

In 2009,which category represented the largest source of receipts for the U.S.federal government?

A) Medicare
B) Social Security
C) corporate income taxes
D) individual income taxes

Question 35

The U.S.federal government collects taxes in a number of ways.Rank the following sources of revenue from the largest to the smallest.

A) corporate income taxes, individual income taxes, social insurance taxes
B) social insurance taxes, individual income taxes, corporate income taxes
C) individual income taxes, social insurance taxes, corporate income taxes
D) individual income taxes, corporate income taxes, social insurance taxes

Question 36

Table 12-1

Refer to Table 12-1.If Damian has $33,000 in taxable income,his tax liability will be

A) $4,531.
B) $4,678.
C) $4,950.
D) $8,269.

Question 37

Table 12-1

Refer to Table 12-1.If Agatha has $80,000 in taxable income,her average tax rate is

A) 18.5%.
B) 20.2%.
C) 21.8%.
D) 25.0%.

Question 38

A family's income tax liability is

A) a standard percentage of all income earned.
B) determined by wage income rather than dividend and interest income.
C) based on total income.
D) constant from year to year.

Question 39

A person's tax liability refers to

A) the percentage of income that a person must pay in taxes.
B) the amount of tax a person owes to the government.
C) the amount of tax the government is required to refund to each person.
D) deductions that can be legally subtracted from a person's income each year.

Question 40

In 2009,the U.S.federal government collected approximately how much in total tax receipts?

A) $307 million
B) $2.1 billion
C) $3.2 billion
D) $6.8 billion

Question 41

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Mateo has taxable income of $165,000,his average tax rate is

A) 26.6%.
B) 26.9%.
C) 27.3%.
D) 28.5%.

Question 42

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Noah has taxable income of $43,000,his marginal tax rate is

A) 8%.
B) 16%.
C) 24%.
D) 34%.

Question 43

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Noah has taxable income of $43,000,his tax liability is

A) $1,920.
B) $4,400.
C) $6,320.
D) $8,175.

Question 44

A payroll tax is a tax on

A) the wages that a firm pays its workers.
B) earned and unearned income.
C) specific goods like gasoline and cigarettes.
D) corporate profits.

Question 45

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Livi has taxable income of $78,000,her marginal tax rate is

A) 19.3%.
B) 24.0%.
C) 26.8%.
D) 34.0%.

Question 46

In 2009,social insurance taxes represented approximately what percentage of total receipts for the federal government?

A) 12%
B) 22%
C) 32%
D) 42%

Question 47

A tax on the wages that a firm pays its workers is called

A) an income tax.
B) an excise tax.
C) a consumption tax.
D) a payroll tax.

Question 48

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Livi has taxable income of $78,000,her average tax rate is

A) 18.7%.
B) 19.3%.
C) 20.1%.
D) 34.0%.

Question 49

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Livi has taxable income of $78,000,her tax liability is

A) $7,800.
B) $9,900.
C) $10,200.
D) $15,020.

Question 50

The government taxes corporate income on the basis of

A) profit.
B) the amount the firm receives for the goods or services it sells.
C) the number of employees.
D) All of the above are correct.

Question 51

The payroll tax differs from the individual income tax because the payroll tax is primarily earmarked to pay for

A) employer-provided pensions.
B) Social Security and Medicare.
C) employer-provided health benefits.
D) job loss and training programs.

Question 52

The revenue that the federal government collects from payroll taxes is earmarked to pay for

A) national defense and income security (welfare) programs
B) national defense and Medicare
C) Social Security and public schools
D) Social Security and Medicare

Question 53

In the United States,the payroll tax is also called a

A) dividend income tax.
B) social insurance tax.
C) value added tax.
D) capital gains tax.

Question 54

In 2009,what percentage of federal government receipts came from corporate income taxes?

A) 7%
B) 15%
C) 25%
D) 42%

Question 55

Table 12-1

Refer to Table 12-1.If Damian has $33,000 in taxable income,his marginal tax rate is

A) 10%.
B) 15%.
C) 25%.
D) 28%.

Question 56

Corporate profits distributed as dividends are

A) tax free.
B) taxed once.
C) taxed twice.
D) taxed three times.

Question 57

Which type of tax is used to finance the Social Security program in the United States?

A) consumption tax
B) income tax
C) payroll tax
D) property tax

Question 58

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Mateo has taxable income of $165,000,his tax liability is

A) $23,800.
B) $36,000.
C) $45,000.
D) $47,698.

Question 59

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Noah has taxable income of $43,000,his average tax rate is

A) 14.7%.
B) 16.3%.
C) 20.8%.
D) 24.0%.

Question 60

Table 12-2
Consider the tax rates shown in the table below.

Refer to Table 12-2.If Mateo has taxable income of $165,000,his marginal tax rate is

A) 16%.
B) 24%.
C) 34%.
D) 36%.

Question 61

Which of the following is not true about government spending on national defense?

A) It is the second-largest spending category for the U.S. federal government.
B) It includes salaries of military personnel.
C) It fluctuates over time as the political climate changes.
D) It is not financed with tax revenue.

Question 62

In 2009,federal government receipts were approximately

A) $6,800 per person and federal government spending was approximately $11,400 per person, resulting in a budget surplus.
B) $6,800 per person and federal government spending was approximately $11,400 per person, resulting in a budget deficit.
C) $11,400 per person and federal government spending was approximately $6,800 per person, resulting in a budget surplus.
D) $11,400 per person and federal government spending was approximately $6,800 per person, resulting in a budget surplus.

Question 63

The government's health plan for the elderly is called

A) Medicaid.
B) Medicare.
C) Social Security.
D) TANF.

Question 64

Medicare has been the focus of many proposed reforms over the last several years because

A) health care costs have risen more rapidly than the cost of other goods and services produced in the economy.
B) nationalized health care systems are more efficient than private health care systems.
C) cures for many major diseases are likely to be found in the next few years.
D) government health care research has found that limiting access to doctors will increase the general health of the population.

Question 65

All of the following are transfer payments except

A) Medicaid.
B) unemployment compensation.
C) personal income taxes.
D) Food Stamps.

Question 66

The U.S.federal government spends its revenues in a number of ways.Rank the following spending categories from largest to smallest.

A) Social Security, national defense, income security, net interest
B) health care, national defense, net interest, income security
C) Social Security, health care, national defense, Medicare
D) national defense, Social Security, net interest, income security

Question 67

Taxes on specific goods such as cigarettes,gasoline,and alcoholic beverages are called

A) sales taxes.
B) excise taxes.
C) social insurance taxes.
D) consumption taxes.

Question 68

In 2009,which category represented the largest category of spending for the U.S.federal government?

A) Medicare
B) Social Security
C) national defense
D) net interest

Question 69

Which of the following statements is correct?

A) National defense and health care are the two largest spending categories for the federal government.
B) Welfare programs and highways are the two largest spending categories for state and local governments.
C) Sales taxes and property taxes are the two most important revenue sources for state and local governments.
D) Corporate income taxes are the largest source of revenue for the federal government.

Question 70

Taxes on specific goods such as gasoline and alcoholic beverages are called

A) excise taxes.
B) payroll taxes.
C) sales taxes.
D) social insurance taxes.

Question 71

In 2009,approximately how much of federal government spending went to Social Security?

A) 9%
B) 19%
C) 29%
D) 39%

Question 72

In 2009 the largest percentage of federal government spending was on

A) national defense. The largest source of federal revenues was from corporate income taxes.
B) national defense. The largest source of federal revenues was from individual income taxes.
C) Social Security. The largest source of federal revenues was from corporate income taxes.
D) Social Security. The largest source of federal revenues was from individual income taxes.

Question 73

Medicare is the

A) government's health plan for the elderly.
B) government's health plan for the poor.
C) another name for Social Security.
D) Both a and c are correct.

Question 74

If Vermont imposed a tax on butter of 50 cents per pound,it would

A) be an excise tax.
B) be an income tax.
C) reduce tax revenue.
D) cause the supply of milk to rise.

Question 75

The three largest categories of spending by the Federal government in order from first to third would be

A) Social Security, Medicare, and national defense
B) national defense, net interest, and Social Security
C) Social Security, national defense, and income security
D) income security, Social Security, and national defense

Question 76

Like spending on Social Security,the share of federal government spending on Medicare has risen substantially over time.This is most likely a result of

A) a rising population of poor in the economy.
B) the elderly population growing more rapidly than the overall population.
C) an immigration policy that promotes an influx of migrant farm workers.
D) All of the above are important factors.

Question 77

A transfer payment is a government payment

A) to companies that provide goods or services to government agencies.
B) designed to transfer funds from one government agency to another.
C) which transfers revenue from the federal government to state government.
D) not made in exchange for a good or service.

Question 78

Corporate profits are

A) included in payroll taxes.
B) exempt from taxes.
C) taxed twice, once as profit and once as dividends.
D) taxed to pay for Medicare.

Question 79

Which of the following is an example of an excise tax?

A) a tax on the wages that a firm pays its workers
B) a tax on tobacco
C) a tax on corporate profits
D) the portion of federal income taxes earmarked to pay for Social Security and Medicare

Question 80

Which of the following are taxed?

A) both corporate profits and dividends shareholders receive
B) corporate profits but not dividends shareholders receive
C) dividends shareholders receive but not corporate profits
D) neither corporate profits nor dividends shareholders receive