Deck 18: Taxation and Redistribution

Question 1

The view that taxes should impose as little excess burden as possible and should be shared fairly among the taxpayers is consistent with the view of government ____

A)as a type of club
B)as a benevolent despot
C)as a constitutional republic
D)as a constitutional democracy

Answer 1

A

Question 2

Which of the following are possible justifications for government redistribution of income?

A)The desire for a more unequal distribution of income.
B)Charity is a collective consumption good and thus might be underprovided.
C)Redistribution acts as insurance against further coercion.
D)Private redistribution of income merely shuffles money around the rich and upper-middle class.

Answer 2

B

Question 3

Which of the following are counterarguments to the viewpoint that taxes are social tools by which we can achieve a more equal society?

A)Redistribution of income through government is unfair coercion of those with higher incomes.
B)Inequality is frequently the result of higher productivity and thus is just.
C)Equality of income occurs naturally over the life cycle so redistribution at one point in time disrupts this natural process.
D)a and b
E)a and c

Answer 3

D

Question 4

A public policy that would lower everyone's income but would lower the income of the rich faster than that of the poor would further the goal of _____.

A)improving the lot of those worse off
B)social justice
C)income equality
D)Pareto optimality

Question 5

If the tax system is made more progressive,the pre-tax wages of low-income workers would _____.

A)fall
B)rise
C)stay constant
D)rise or fall depending upon job market conditions

Question 6

John Rawls' argument for maximizing the well-being of those who are least well off in society recognizes _____.

A)that everyone is the same
B)that the disincentives toward earning income inherent in redistribution
C)that social welfare is maximized when income is equalized
D)a and c

Question 7

The goals of helping those in poverty and creating income equality _____.

A)are the same thing
B)are sometimes in conflict
C)are always in conflict
D)are never in conflict

Question 8

If the redistributive character of the tax system is measured by looking at the additional taxes paid by high-income individuals and reduction in taxes to low-income individuals,the dollar amount of redistribution will be _____.

A)overestimated
B)underestimated
C)estimated correctly
D)estimated improperly,possibly over or under

Question 9

A redistributive program that taxes the rich and gives to the poor _____.

A)is an example of equality of opportunity in action
B)is an example of equality of results in action
C)is an example of the an economically efficient transfer
D)is an example of a procedural theory of justice in action

Question 10

Which of the following are motivations for those seeking redistributive transfers?

A)The creation of more income equality.
B)To help out those who are less fortunate
C)To create a more just economic system.
D)a and b
E)all of the above

Question 11

When economic analysis takes place within the context of maximizing a social welfare function,the conclusion always is _____.

A)that income should be completely redistributed
B)that income should not be redistributed at all
C)that some level of redistribution is optimal
D)that income redistribution has no relations to maximizing social welfare

Question 12

_____ is embodied in the notion of a social welfare function.

A)Progressivism
B)Socialism
C)Utilitarianism
D)Social insurance

Question 13

A goal of equality of income can be justified based on the utilitarian idea that _____.

A)individuals face diminishing marginal utility of income
B)social welfare functions are convex to the origin
C)rich people have more than they every could need
D)redistribution does not lead to an increased excess burden of taxation

Question 14

If charity is a collective consumption good then government redistribution of resources can be justified on the basis that _____.

A)government can act as a catalyst to encourage more private giving
B)government helps deal with the prisoner's dilemma problem
C)government overcomes the free riding problem
D)government consumption is one-third of gross domestic product

Question 15

Redistribution can be thought of as insurance because _____.

A)those with low incomes often do not think of purchasing insurance
B)those with low incomes cannot afford insurance
C)individuals want to protect themselves from the small probability that they might become impoverished
D)a and b

Question 16

The typical by-product of policies that create more equality by making the rich worse off is _____.

A)an increase in the economic multiplier
B)a decline in conspicuous consumption
C)and increase in social stratification
D)a lowering of economic productivity

Question 17

Which of the following is not an example of inequality of opportunity?

A)The Indian caste system.
B)The Japanese public education system.
C)Jim Crow laws in the United States.
D)South African apartheid.

Question 18

Charitable activity _____.

A)is a Pareto superior move
B)is a Pareto optimal move
C)is unnecessary given today's redistribution policies
D)is unaffected by free riding

Question 19

The easiest way to create greater income equality is to _____.

A)raise everyone's income by the same percentage
B)raise everyone's income by the same amount
C)raise the incomes of the poor
D)lower the incomes of the rich

Question 20

One should ignore the degree of income inequality _____.

A)when one considers the design of redistribution programs
B)when one only cares about improving the lot of the worst off in society
C)when considering whether or not to transfer resources from the rich to the poor
D)when considering progressive taxation

Question 21

Price floors,such as government price support programs,_____.

A)decrease consumption
B)increase production
C)decrease production
D)a and b
E)a and c

Question 22

Those who administer poverty programs have strong incentives to _____.

A)ignore the poor
B)perpetuate poverty
C)eliminate poverty
D)that poverty is minimized

Question 23

Redistribution programs typically are concerned with international income inequality.

Question 24

The establishment of a government redistributive program such as price supports creates _____.

A)higher consumer consumption
B)above-normal annual profits
C)a transitional gain
D)independency among recipients

Question 25

Around 25 percent of the federal government's budget goes towards redistributive programs.

Question 26

Inequality is often the result of higher levels of work and productivity.

Question 27

Welfare payments _____.

A)often increase the marginal cost of being employed
B)often decrease the marginal cost of being employed
C)have led to a tremendous decline in poverty since 1968
D)have no relationship to the marginal cost of being employed

Question 28

Equality of opportunity demands fair rules and does not require transfer programs.

Question 29

The amount of redistribution in the United States has increased considerably since 1968.Over that same period,the percentage of households in poverty has _____.

A)fallen
B)risen
C)remained constant
D)fell until 1982 at which point it began rising again

Question 30

Helping the poor is synonymous with more income equality.

Question 31

If all of the money currently spent on redistribution in the United States were directly transferred to the poor _____.

A)it could turn the hard-core poor into the marginal poor
B)it would not turn the hard-core poor into the marginal poor
C)it is unclear what the effect would be on the hard-core poor
D)the income of the poor would be raised above the current national average

Question 32

The most effective redistribution programs provide assistance to the hard core poor and transitory assistance to the marginal poor without _____.

A)creating dependency on welfare payments
B)costing taxpayers too much
C)changing the behavior of individuals
D)a and c

Question 33

If the tax system is made more progressive,the after-tax wages of high-income workers would _____.

A)fall
B)rise
C)stay constant
D)rise or fall depending upon job market conditions

Question 34

Government redistribution of income in response to individuals free riding on the charity of others is a Pareto superior move.

Question 35

Most U.S.redistribution occurs from _____.

A)high-income individuals to low-income individuals
B)middle-income individuals to low-income individuals
C)middle-income individuals to middle-income individuals
D)low-income individuals to middle-income individuals

Question 36

Most U.S.redistribution occurs from _____.

A)high-income individuals to low-income individuals
B)middle-income individuals to low-income individuals
C)middle-income individuals to middle-income individuals
D)low-income individuals to middle-income individuals

Question 37

In general,the optimal taxation literature finds that a society can maximize social welfare through income redistribution.

Question 38

Dairy price supports have the effect of _____.

A)decreasing the value of farmland
B)increasing the value of farmland
C)destroying farmland
D)increasing consumption of dairy products

Question 39

John Rawls' theory of justice does not take into account the disincentive effects of redistributive programs.

Question 40

The increase in redistributive programs as a percentage of the government's budget has led to _____.

A)a greater potential payoff for special interests
B)a welfare bureaucracy dependent upon the existence of the redistributive program
C)a concomitant rise in private charity
D)a and b
E)b and c

Question 41

Most redistribution is not targeted to the poor.

Question 42

Is the difference in the increase in money taken from the rich and the reduction in money taken from the poor a good measure of the redistributive impact of a progressive income tax system? Why or why not?

Question 43

Are policies that aim to help the poor identical to policies that achieve income equality? Why or why not?

Question 44

Have redistribution programs decreased poverty since 1968? Discuss the role of program administrators and their bureaus in explaining your answer.

Question 45

Individuals become dependent on welfare payments because the benefits that have to be given up in order to become employed are higher than the benefits from working.

Question 46

If a tax system is made more progressive,the pre-tax wages of upper-income individuals will tend to rise.

Question 47

Explain the difference between equality of opportunity and equality of results.Draw an analogy to a football game.

Question 48

Provide a utilitarian justification for using the tax system to provide a more equal distribution of income as well as two possible counterarguments to this viewpoint.

Question 49

The administrators of welfare programs have strong incentives to eliminate poverty.

Question 50

Dairy price supports create permanent,above-normal rates of return to dairy farming.

Question 51

A sufficient measure of the effectiveness of government redistribution is to look at the overall level of taxpayer dollars spent on redistributive activities.

Question 52

Explain why charitable giving is Pareto superior move.Is there an economic explanation of why the supply of charity might be sub-optimal? Explain.