Exam 17: Taxation and Resource Allocation

What is personal income tax? On which principle does the federal government levy this tax?

Indirect taxes are levied on specific economic activities.

A progressive income tax system can be defined as one in which

Excise taxes are a form of sales tax.

Rhode Island has enacted a substantial increase in the tax on employers that finances the workman's compensation system.For some employers, the tax is about $25 per $100 paid in wages.Employers claim they cannot afford to pay the tax.Under which of the following conditions will the actual burden of the tax fall on employers?

The Social Security system in the United States today is

The head tax is regressive.

Under a regressive tax, the fraction of income paid in taxes

Edgar Browning and William Johnson, in a paper published in the Journal of Political Economy (1984), presented evidence that a one-dollar transfer to the bottom 40 percent of income distribution costs the top 60 percent nine dollars.If correct, this finding proves

Tax loopholes are equally available to all taxpayers.

Figure 18-1 -The economic burden of an excise tax

Figure 18-1 -According to the graph in Figure 18-1, the tax is which of the following?

The payroll tax appears to be a proportional tax.In reality, it is

Over the past decade, increasing real wages have offset slower population growth adding to the Social Security Trust Fund.

Which of the following is a direct tax?

The idea of horizontal equity in taxation implies that

Homeowners

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Explain the concept of efficiency as it relates to taxation.

Vertical equity refers to the idea that