Deck 16: The Tax System in the United States

Question 1

While regressive taxes are considered inequitable,cigarette taxation is popular because _____.

A)it is a sumptuary tax
B)it mainly hurts tobacco farmers in a few Southern states
C)in a lifetime sense it is a progressive tax
D)people are inconsistent

Answer 1

A

Question 2

Considering all taxes collected at all levels,taxation in the United States is _____ when looked at in terms of lifetime income.

A)proportional
B)slightly progressive
C)slightly regressive
D)n-shaped

Answer 2

B

Question 3

Taxes that enhance economic efficiency will have a better chance of passing through Congress than less efficient tax reforms._____.

A)This is probably enough to produce an efficient tax system
B)This is not enough to produce an efficient tax system
C)This shows special interests have no impact.
D)This shows that many government officials act in the public interest.

Answer 3

B

Question 4

Federal taxes make up about ______ percent of total taxes.

A)40
B)50
C)60
D)70

Question 5

Cigarette taxes are viewed as _____.

A)regressive
B)progressive
C)proportional
D)non-distortionary

Question 6

The percentage of property taxes collected by local governments is about _____.

A)15 percent
B)45 percent
C)75 percent
D)95 percent

Question 7

Which of the following is not a reason for the establishment of intergovernmental transfer programs?

A)Higher level governments want to encourage lower governments to undertake certain programs.
B)Taxes are harder to avoid at higher levels of government.
C)To provide for national defense resources utilized at the local level.
D)Equalization of resources between richer and poorer localities

Question 8

A significant portion of the increase in state tax revenues from 1950 to 1970 was because _____.

A)of high inflation
B)of increased economic growth due to the Korean conflict
C)many states adopted new tax bases they had previously not taxed
D)increased property tax rates

Question 9

Two-thirds of sales tax revenues are collected by _____.

A)the federal government
B)state governments
C)county governments
D)city governments

Question 10

Comparing individuals taxes paid in one year with their incomes paid that year is likely to _____.

A)overstate the progressive nature of the tax system
B)overstate the regressive nature of the tax system
C)understate the progressive nature of the tax system
D)overstate the regressive nature of the tax system

Question 11

In 1950,the largest category of state and local revenue (as a percentage of GDP)came from _____.

A)individual income taxes
B)sales and gross receipt taxes
C)property taxes
D)estate taxes

Question 12

Most income tax revenues are collected by _____.

A)the federal government
B)state governments
C)county governments
D)city governments

Question 13

The most progressive tax of the major taxes employed in the United States _____.

A)are sales taxes
B)are excise taxes
C)are income taxes
D)are property taxes

Question 14

In any given year,many people at the tails of the income distribution are only there temporarily _____.

A)because of changes in the tax code
B)making it difficult to track them for determining progressivity
C)thereby overstating the progressive nature of the tax system
D)making it important to look at the progressivity of the tax system in terms of lifetime income

Question 15

The federal government relies most heavily on which source of revenue?

A)individual income taxes
B)corporate income taxes
C)social insurance payroll taxes
D)excise taxes

Question 16

A major source of revenues for state and local governments is _____.

A)income taxes
B)payroll taxes
C)intergovernmental revenues
D)estate taxation

Question 17

Most changes in tax laws tend to be small changes because _____.

A)the organizing costs of large coalitions are too high
B)logrolling is easier when tax laws effect only a small number of individuals
C)special interests are constantly demanding changes that will benefit them
D)of the rules of the Senate

Question 18

Which of the following is not a problem with examining the progressivity of the tax system over a lifetime?

A)The uncertainty over future tax code changes make forecasting of future taxes nearly impossible.
B)Such accounting does not consider what the taxes are spent on.
C)The fact that poor people do not live as long as wealthy individuals.
D)Accurately estimating who is actually paying taxes.

Question 19

The increase importance of Social Security taxes at the federal level has likely _____.

A)decreased the excess burden of the federal tax sytem
B)increased the efficiency of the federal tax system
C)increased the progressivity of the federal tax system
D)reduced the progressivity of the federal tax system

Question 20

Special interests are likely to have less influence over tax reform _____.

A)when the reform is small
B)when the reform is comprehensive
C)when the reform is at the local level
D)when the reform is at the state level

Question 21

The 2002 tax reform is a good example of special interests being less influential because Congress was considering comprehensive tax reform.

Question 22

The property tax exhibits a U-shaped patter with respect to income.

Question 23

State whether property taxes,income taxes,and sales taxes are progressive,regressive,proportional,or none of the above.What about the tax system as a whole?

Question 24

A pessimistic view of the 1986 tax reform is that Congress simplified the tax code _____.

A)because it represented a Pareto superior move
B)created new loophole opportunities that did not exist previously
C)in order to increase the efficiency in the system
D)because it was in the best interests of the special interests

Question 25

The optimal treatment of a tax on a stock of wealth depends ____.

A)on how the flow of income from that wealth is taxed
B)on how the stock itself is taxed
C)on whether or not there is an estate tax
D)on the size of a stock

Question 26

History tells us that "fine tuning" of the tax code is likely to be in the public interest.

Question 27

The best way to evaluate the effect of a specific tax is _____.

A)to consider the tax in isolation
B)to consider the tax in the context of the entire tax system
C)to consider whether a tax is progressive,regressive,or proportional
D)a and c

Question 28

The problem of a complex tax code filled with loopholes may be overcome by proposing a complete overhaul of the entire system that lowers taxes for everyone because it _____.

A)represents a Pareto superior move
B)takes advantage of rational ignorance
C)benefits all special interests
D)a and b

Question 29

Around what percentage of state government spending is finance by intergovernmental transfers? Give three justifications for intergovernmental transfers.

Question 30

_____ is when the total amount of taxes collected as a result of a tax reform is unchanged.

A)Revenue enhancing tax reform
B)Revenue neutral tax reform
C)Comprehensive constant tax reform
D)Comprehensive tax reform

Question 31

Most changes to the tax code are in the form of loopholes that allows special interests to reduce their tax liability.

Question 32

The current tax system is extremely progressive at the extreme ends of the income distribution.

Question 33

For each level of government (federal,state and local)list the most important source of tax revenue.

Question 34

When evaluating the taxation of dividends in isolation,it is easy to overlook the double taxation of saving.

Question 35

Changes in the federal tax structure have a significant effect on state income tax collections because most states base their tax structure on the federal tax structure.

Question 36

What is meant by revenue-neutral tax reform? How might agreeing to revenue-neutral tax reform help lead to a more efficient tax system?

Question 37

Adhering to the principle of revenue neutrality _____.

A)allows for the separation of efficiency and the overall level of taxation
B)allows for the separation of equity and the overall level of progressivity
C)allows for the separation of equity and government spending
D)allows for the separation of efficiency and intergovernmental transfers

Question 38

Explain why a comprehensive tax reform that aims to eliminate loopholes while promising to lower rates for everyone is the best opportunity for an efficiency-enhancing tax reform.

Question 39

Only two states do not have state personal income taxes.

Question 40

Intergovernmental revenue is an insignificant source of state and local revenue.