Exam 2: Policy Standards for a Good Tax

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 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 false?

Jurisdiction P recently increased its income tax rate.A taxpayer who reacts to the increase by working harder to earn more income is demonstrating the income effect of the rate increase.

A tax should result in either horizontal or vertical equity across taxpayers.

Jurisdiction F levies a 10% excise tax on the purchase of golf carts.The annual revenue from this tax averages $800,000 (10% * $8 million average annual golf cart purchases).Jurisdiction F is considering raising the tax rate to 12%.Which of the following statements is true?

A progressive rate structure and a proportionate rate structure both result in vertical equity across taxpayers.

A dynamic forecast of the incremental revenue from a tax rate increase presumes that:

The city of Berne recently enacted a 10% tax on the price of a subway ticket.Consequently,Mrs.Lane now walks to work instead of taking the subway.Her behavior illustrates the substitution effect of a tax increase.

Which of the following statements about the income effect of an income tax rate increase is true?

Which of the following taxes is most convenient for individuals to pay?

A static forecast of the incremental revenue from a tax rate increase presumes that:

The federal Social Security tax burden on employees has not increased since 1990 because the tax rate has not increased since that year.

Government L levies a 4% excise tax on restaurant meals.It is considering reducing the rate to 2% on meals served in restaurants that ban cigarette and cigar smoking and to increase the rate to 5% in restaurants that allow smoking.Which of the following statements is true?

Government officials of Country Z estimate that next year's public programs will cost $19 million but that tax revenues will be only $15 million.The officials could avoid a deficit next year by adopting which of the following fiscal strategies?

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

Vertical equity focuses on measurement of the tax base,and horizontal equity focuses on the tax rate structure.

Tax liability divided by taxable income equals marginal tax rate.

A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government.