Question 1

Vervet County levies a real property tax based on the following schedule.   Which type of rate structure does this tax use?
A)Proportionate
B)Regressive
C)Progressive
D)Dual-bracket

Accepted Answer

The answer of Vervet County levies a real property tax...

Question 2

Which of the following statements concerning a regressive tax rate structure is true?
A)A regressive tax rate structure is justified by the tax policy of distributive justice.
B)A regressive rate structure is justified by the theory of the declining marginal utility of income.
C)Under a regressive rate structure,the average tax rate for high-income taxpayers is less than the marginal tax rate.
D)None of the above statements is true.

Accepted Answer

A regressive tax rate structure is not justified by distributive justice or declining marginal utility of income, and under such a structure, the average tax rate decreases as income increases, which contradicts statement C.

Question 3

Which of the following statements about a proportionate income tax rate structure is false?
A)A theoretic justification for a proportionate rate is its superior potential for wealth redistribution.
B)Under a proportionate rate structure,the marginal rate equals the average rate.
C)Under a proportionate rate structure,the taxpayer with the least income pays the same percentage of income to the government as the taxpayer with the most income.
D)None of the above is false.

Accepted Answer

A proportionate income tax rate structure is not designed for wealth redistribution, but rather for all taxpayers to pay the same percentage of their income to the government. The statement in option A is therefore false.

Question 4

Jurisdiction M imposes an individual income tax based on the following schedule.   Which of the following statements is false?
A)If Ms.Lui's taxable income is $33,400,her average tax rate is 5%.
B)If Mr.Bell's taxable income is $519,900,his marginal tax rate is 12%.
C)If Ms.Vern's taxable income is $188,000,her average tax rate is 7.2%.
D)None of the choices are false.

Accepted Answer

The answer of Jurisdiction M imposes an individual income tax...

Question 5

Jurisdiction M imposes an individual income tax based on the following schedule.   Which of the following statements is true?
A)If Mrs.Hall's taxable income is $227,000,her average tax rate is 12%.
B)If Mr.Poe's taxable income is $41,200,his marginal tax rate is 8%.
C)If Ms.Kaye's taxable income is $63,800,her marginal tax rate is 8%.
D)None of the choices are correct.

Accepted Answer

The marginal tax rate is the tax rate applied to each additional dollar of taxable income. Looking at the tax schedule, we can see that the marginal tax rate for taxable income in the range of $38,700 to $82,500 is 8%. Therefore, if Ms.Kaye's taxable income is $63,800, her marginal tax rate is 8%. 
Option A is incorrect because the average tax rate for $227,000 is found by dividing the total tax by the taxable income. The total tax is found by adding up the amount of tax paid for each bracket, which is $2,739 + $6,689 + $10,176 + $12,434 + $16,624 + $22,449 + $28,323 for a total of $99,434. Dividing this by $227,000 gives an average tax rate of approximately 43.8%, not 12%. 
Option B is incorrect because Mr. Poe's taxable income falls under the bracket for taxable income up to $9,875, which has a marginal tax rate of 10%, not 8%. 
Option D is incorrect because option C is correct.

Question 6

Which of the following statements concerning income tax rate structures is false?
A)Under a progressive rate structure,the marginal rate and the average rate are equal.
B)Under a regressive rate structure,the average rate for low-income individuals is more than the average rate for high-income individuals.
C)Under either a regressive,proportionate,or progressive rate structure,high-income taxpayers pay more dollars of tax than low-income individuals.
D)In theory,a progressive rate structure results in equal economic sacrifice across taxpayers.

Accepted Answer

Under a progressive rate structure, the marginal tax rate (the rate on the next dollar of income earned) increases as income increases, which means it is not equal to the average tax rate (total taxes paid divided by total income) for a taxpayer. The average tax rate is typically lower than the marginal rate for any given level of income in a progressive system.

Question 7

Vervet County levies a real property tax based on the following schedule.   Bilex Inc.owns real property valued at $629,800.Compute Bilex's tax on this property.
A)$13,798
B)$7,500
C)$6,298
D)None of the choices are correct.

Accepted Answer

The answer of Vervet County levies a real property tax...

Question 8

Which of the following statements about tax rate structures is true?
A)Regressive rate structures are illegal in the United States.
B)A tax with a graduated rate structure must be either regressive or progressive.
C)A proportionate rate structure is the only structure resulting in vertical equity.
D)None of the above is true.

Accepted Answer

The answer of Which of the following statements about tax...

Question 9

Jurisdiction M imposes an individual income tax based on the following schedule.   Mr.Coen has $78,000 taxable income.Compute the tax on this income.
A)$4,740
B)$6,240
C)$8,740
D)None of the choices are correct.

Accepted Answer

The answer of Jurisdiction M imposes an individual income tax...

Question 10

Which of the following tax policies would increase the redistribution of wealth across society?
A)Repealing the federal estate and gift taxes
B)Increasing the highest marginal income tax rate by 10%
C)Replacing the progressive income tax rate structure with a flat rate
D)Replacing the income tax with a national sales tax

Accepted Answer

Increasing the highest marginal income tax rate by 10% would result in a greater proportion of income being taxed at a higher rate for those with higher incomes, leading to a greater redistribution of wealth across society. Repealing the federal estate and gift taxes, replacing the progressive income tax rate structure with a flat rate, or replacing the income tax with a national sales tax would likely have the opposite effect, reducing the progressivity of the tax system and shifting the tax burden away from those with higher incomes.

Question 11

Jurisdiction M imposes an individual income tax based on the following schedule.   Which type of rate structure does this tax use?
A)Proportionate
B)Regressive
C)Progressive
D)Multi-bracket

Accepted Answer

The tax rate increases as the taxable income increases, which means that those with higher incomes pay a higher percentage of their income in taxes. This is a characteristic of a progressive tax system.

Question 12

Congress plans to amend the federal individual income tax to eliminate the deductions for medical care,educational savings,charitable contributions,and home mortgage interest.Which of the following statements is true?
A)The amendment will reduce the complexity of the tax.
B)The amendment will increase the horizontal equity of the tax.
C)The amendment will increase the neutrality of the tax.
D)Both the amendment will reduce the complexity of the tax and will increase the neutrality of the tax.

Accepted Answer

Eliminating deductions for medical care, educational savings, charitable contributions, and home mortgage interest will simplify the tax code and reduce complexity. Additionally, it will increase neutrality by treating all taxpayers equally, regardless of their use of certain deductions. Horizontal equity will remain unchanged as all taxpayers will be treated equally under the amended tax code.

Question 13

Which of the following statements about a regressive tax rate structure is false?
A)A regressive rate structure cannot result in vertical equity.
B)Regressive rates decrease as the tax base increases.
C)A regressive rate structure places a proportionally heavier tax burden on taxpayers with smaller tax bases than persons with greater tax bases.
D)None of the above is false.

Accepted Answer

The answer of Which of the following statements about a...

Question 14

Congress originally enacted the federal estate and gift taxes to improve:
A)Distributional justice
B)Economic efficiency
C)Vertical equity
D)Horizontal equity

Accepted Answer

The federal estate and gift taxes were implemented to improve distributional justice, by redistributing wealth and reducing economic inequality.

Question 15

Which of the following statements about a progressive tax rate structure is false?
A)Progressive rates increase as the tax base increases.
B)Progressive rates reflect the theory of the declining marginal utility of income.
C)The federal income tax has always used a progressive rate structure.
D)Progressive rates result in greater vertical equity than a proportionate rate.

Accepted Answer

The answer of Which of the following statements about a...

Question 16

Jurisdiction M imposes an individual income tax based on the following schedule.   Ms.Owen has $314,000 taxable income.Compute the tax on this income.
A)$29,680
B)$28,180
C)$37,680
D)None of the choices are correct.

Accepted Answer

The answer of Jurisdiction M imposes an individual income tax...

Question 17

Which of the following statements concerning the standard of fairness is false?
A)People who believe that a tax is unfair are more likely to evade the tax.
B)People believe that the federal income tax is unfair because it contains preferences available only to wealthy individuals.
C)The public perception that the federal income tax is unfair has decreased in recent decades.
D)None of the above is false.

Accepted Answer

The statement that the public perception that the federal income tax is unfair has decreased in recent decades is false. In fact, according to surveys, there has been a consistent belief among the public that the federal income tax is unfair, and this perception has not significantly changed over time.

Question 18

Vervet County levies a real property tax based on the following schedule.   Which of the following statements is false?
A)If Mr.Clem owns real property valued at $112,500,his average tax rate is 3%.
B)If Ms.Barker owns real property valued at $455,650,her average tax rate is 2.1%.
C)If Ms.Lumley owns real property valued at $750,000,her marginal tax rate is 1%.
D)None of the choices are false.

Accepted Answer

The answer of Vervet County levies a real property tax...

Question 19

Congress plans to amend the federal income tax to provide a deduction for the first $2,400 of residential rent paid by families with incomes below the federal poverty level.Which of the following statements is true?
A)The amendment is intended to improve the efficiency of the tax.
B)The amendment is intended to improve the equity of the tax.
C)The amendment is intended to improve the simplicity of the tax.
D)The amendment is intended to improve the convenience of the tax.

Accepted Answer

The amendment is intended to improve the equity of the tax system by providing a tax deduction for families with low incomes, which will reduce their tax burden and make the tax system more fair. The amendment does not necessarily improve efficiency, simplicity, or convenience of the tax system.

Question 20

Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?
A)The amendment is intended to improve the efficiency of the tax.
B)The amendment is intended to improve the equity of the tax.
C)The amendment is intended to improve the simplicity of the tax.
D)The amendment is intended to improve the convenience of the tax.

Accepted Answer

The amendment aims to provide a deduction for the cost of energy-efficient fluorescent light bulbs, which encourages people to adopt energy-efficient lighting practices in their homes and businesses. This, in turn, helps to reduce energy consumption and improve energy efficiency. Therefore, the amendment is intended to improve the efficiency of the tax system.

Quiz 2: Policy Standards for a Good Tax

Vervet County levies a real property tax based on the following schedule. Which type of rate structure does this tax use?

Which of the following statements concerning a regressive tax rate structure is true?

Which of the following statements about a proportionate income tax rate structure is false?

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is false?

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Which of the following statements concerning income tax rate structures is false?

Vervet County levies a real property tax based on the following schedule. Bilex Inc.owns real property valued at $629,800.Compute Bilex's tax on this property.

Which of the following statements about tax rate structures is true?

Jurisdiction M imposes an individual income tax based on the following schedule. Mr.Coen has $78,000 taxable income.Compute the tax on this income.

Which of the following tax policies would increase the redistribution of wealth across society?

Jurisdiction M imposes an individual income tax based on the following schedule. Which type of rate structure does this tax use?

Congress plans to amend the federal individual income tax to eliminate the deductions for medical care,educational savings,charitable contributions,and home mortgage interest.Which of the following statements is true?

Which of the following statements about a regressive tax rate structure is false?

Congress originally enacted the federal estate and gift taxes to improve:

Which of the following statements about a progressive tax rate structure is false?

Jurisdiction M imposes an individual income tax based on the following schedule. Ms.Owen has $314,000 taxable income.Compute the tax on this income.

Which of the following statements concerning the standard of fairness is false?

Vervet County levies a real property tax based on the following schedule. Which of the following statements is false?

Congress plans to amend the federal income tax to provide a deduction for the first $2,400 of residential rent paid by families with incomes below the federal poverty level.Which of the following statements is true?

Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?