Question 1

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

Accepted Answer

Increasing the highest marginal income tax rate means that those who earn higher incomes will be taxed at a higher rate, which results in a more progressive tax system and increased redistribution of wealth. The other options would either reduce taxation on the wealthy or create a regressive tax system, which would not achieve the goal of increasing redistribution of wealth.

Question 2

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

Accepted Answer

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

Question 3

Which of the following statements concerning the standard of fairness 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, there has been a significant increase in the belief that the tax system is unfair, particularly among low- and middle-income earners.

Question 4

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

Accepted Answer

A proportionate income tax rate structure does not necessarily have a superior potential for wealth redistribution. A progressive rate structure is typically considered more effective for wealth redistribution as it places a greater burden on those with higher incomes.

Question 5

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

Accepted Answer

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

Question 6

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?

Accepted Answer

By providing a deduction for residential rent paid by families with incomes below the federal poverty line, the amendment is intended to improve the equity of the tax, as it would provide targeted relief for those who are most in need. It does not necessarily improve efficiency, simplicity, or convenience.

Question 7

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

Accepted Answer

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

Question 8

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

Accepted Answer

The marginal tax rate is the rate at which the last dollar of income is taxed. From the schedule, we can see that for taxable income between $41,202 and $85,000, the marginal tax rate is 8%. Therefore, option B is incorrect because Mr. Poe's taxable income falls in this bracket, and his marginal tax rate is 8%. Option A is incorrect because if Mrs. Hall's taxable income is $227,000, her marginal tax rate is 8% on the income from $85,001 to $227,000 and 6% on the income from $40,000 to $85,000, giving an average tax rate of less than 12%. Option C is correct because if Ms. Kaye's taxable income is $63,800, her marginal tax rate is 8% on the income from $41,202 to $63,800.

Question 9

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

Accepted Answer

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

Question 10

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.

Accepted Answer

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

Question 11

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?

Accepted Answer

The amendment will reduce the complexity of the tax by eliminating multiple deductions. This will also increase the neutrality of the tax as it will treat all taxpayers equally regardless of their expenses related to medical care, education, charity, or home mortgage interest. Therefore, statements A and C are true. However, the amendment will not increase the horizontal equity of the tax as it will eliminate deductions that were available to all taxpayers irrespective of their income levels.

Question 12

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

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

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?

Accepted Answer

The amendment is intended to improve the efficiency of the tax by promoting energy-efficient behavior through a tax deduction.

Question 15

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.

Accepted Answer

According to the given schedule, the tax on $314,000 taxable income would be calculated as follows:
$45,000 @ 2% = $900
$45,350 @ 3% = $1,360.50
$49,000 @ 4% = $1,960
$59,000 @ 5% = $2,950
$75,300 @ 6% = $4,518
$314,000 - $273,650 = $40,350 @ 7% = $2,824.50
Total tax = $14,513.50
Therefore, the correct option is B) $28,180.

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

The tax schedule in the given information has multiple brackets with increasing tax rates for higher income levels. This is a characteristic of a progressive tax. Therefore, the type of rate structure used by Jurisdiction M is a progressive tax.

Question 18

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.

Accepted Answer

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

Question 19

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

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 20

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

Accepted Answer

The federal estate and gift taxes were originally enacted to improve distributional justice, which refers to the fairness of how resources or benefits are distributed among individuals or groups in society. The taxes were intended to prevent the accumulation of wealth within a few families and to promote a more equal distribution of wealth among the population.

Quiz 2: Policy Standards for a Good Tax

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

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

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

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

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. Which of the following statements is true?

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

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.

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?

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

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

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.

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

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

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 concerning income tax rate structures is false?

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