Question 1

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 encouraging individuals to use energy-efficient fluorescent light bulbs. This is because the use of such bulbs reduces energy consumption, which is consistent with the goal of promoting energy efficiency.

Question 2

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 3

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

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

Question 4

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

Accepted Answer

This tax uses a progressive rate structure, as the tax rate increases as the taxable income increases.

Question 5

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

Eliminating deductions simplifies the tax code (A) and increases neutrality by not favoring certain expenditures (C).

Question 6

Congress originally enacted the federal estate and gift taxes to improve: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The federal estate and gift taxes were originally enacted to improve distributional justice by ensuring that wealthy individuals paid their fair share of taxes and to prevent the concentration of wealth and power in a few individuals or families.

Question 7

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

Accepted Answer

According to research, public perception that the federal income tax is unfair has remained relatively stable over the past few decades, rather than decreasing.

Question 8

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 9

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 10

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

Accepted Answer

Increasing the highest marginal income tax rate would increase the amount of taxes paid by the wealthiest individuals in society, which would help redistribute wealth to lower and middle-income households. Repealing the federal estate and gift taxes, replacing the progressive income tax rate structure with a flat rate, and replacing the income tax with a national sales tax would all decrease the progressiveness of the tax system and likely result in less redistribution of wealth.

Question 11

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 12

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 13

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 14

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

Deducting the first $2,400 of residential rent paid by families with incomes below the federal poverty level is intended to improve the equity of the tax (i.e. make it more fair). By providing this deduction, families with lower incomes will be able to reduce their taxable income, and potentially pay a lower tax bill or receive a larger refund. This helps to offset the burden of the tax for those with lower incomes and promotes a more equal distribution of the tax burden.

Question 15

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 16

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 17

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 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

We can find the correct answer by matching the given taxable income with the tax rate schedule.

A) For Mrs. Hall's taxable income of $227,000, her marginal tax rate is 10%. However, her average tax rate would be ($5,464 + $18,340 + $24,600 + $27,520 + $26,050) / $227,000 = 23.24%, which is not 12%. Therefore, option A is incorrect.

B) For Mr. Poe's taxable income of $41,200, his average tax rate would be ($412 + $824) / $41,200 = 2%, and his marginal tax rate would be 4%. Therefore, option B is incorrect.

C) For Ms. Kaye's taxable income of $63,800, her marginal tax rate would be 8%, and her average tax rate would be ($1,236 + $2,472 + $4,084) / $63,800 = 10.09%. Therefore, option C is correct.

D) Since option C is true, option D cannot be the correct answer.

Question 20

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

Accepted Answer

A proportionate rate structure does not necessarily have superior potential for wealth redistribution, as it does not differentiate between income levels. Progressive rate structures typically have a greater potential for wealth redistribution as they tax higher incomes at a higher rate.

Quiz 2: Policy Standards for a Good Tax

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?

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.

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?

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

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

Which of the following statements concerning a regressive tax rate structure 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 tax policies would increase the redistribution of wealth across society?

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 income tax rate structures 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?

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.

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 statements about a regressive tax rate structure is false?

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

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 proportionate income tax rate structure is false?