Exam 18: Public Choice, Taxes, and the Distribution of Income

Table 18-2 -Refer to Table 18-2.The table above lists three policy alternatives that the U.S.Senate will vote on, along with the ranking of these alternates.The Senate must decide which of these alternatives should receive an additional $1 billion of funding, and there is enough money in the federal budget for only one of these alternatives.If a series of votes is taken in which each pair of alternatives is considered (homeland security and education; homeland security and medical research; education and medical research)which of the following will result from these votes?

If you pay $3,000 in taxes on an income of $28,000, and $4,450 in taxes on an income of $38,000, what is your marginal tax rate? Show your work.

Figure 18-4 -Refer to Figure 18-4.Rank the above panels in terms of most unequal income distribution to least unequal income distribution.

Most businesses in the United States are sole proprietorships.Most sole proprietors pay ________ on their profits.

Table 18-11 Table 18-11 shows income distribution data for two countries. Use this data to answer the following questions. -Refer to Table 18-11. a.Draw a Lorenz curve for each country. b.Which country has the more equal distribution of income? c.Based on the Lorenz curves for the two countries, can you determine which country has the more progressive tax system? Explain your answer.

The distribution of income typically refers to how income is distributed across the population ________.Income mobility looks at how a person or family's income changes ________.

Suppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: A.subsidies for education B.research on Alzheimer's C.increased border security If voters prefer a to b and b to c, then if preferences are transitive

The median voter theorem states that the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle.

The term "payroll taxes" is often used to refer to

A marginal tax rate is

Both Presidents Kennedy and Reagan proposed significant cuts in income taxes.Opponents of these tax cut proposals argued that

A Lorenz curve summarizes the information provided by a Gini coefficient.

Why is a typical person likely to gather more information when buying a new car than when voting for a member of Congress?

According to the ability-to-pay principle of taxation

If you pay $2,000 in taxes on an income of $20,000, and a tax of $2,700 on an income of $30,000, then over this range of income the tax is

In the United States, the federal income tax is an example of a

Article Summary State tax revenue from marijuana sales in Colorado has surpassed $500 million since its legalization in January 2014. Colorado has imposed three types of state taxes on marijuana: a 2.9% sales tax on medical marijuana, a 15% special sales tax for recreational use, and a 15% excise tax on wholesale marijuana transfers. About half of the accumulated tax revenue has gone to K-12 education, with over $100 million used to fund school construction projects. Twenty-five percent of the tax is being spent on substance abuse prevention and treatment programs. Source: Katelyn Newman, "Milestoned: Colorado Pot Tax Revenue Surpasses $500 M," usnews.com, July 20, 2017. -Refer to the Article Summary.Suppose the sale of marijuana is legalized in Florida, and the state decides to charge a tax of $50 per ounce on each sale, with the state claiming that retailers will bear the entire burden of this tax.Draw a graph illustrating the situation where retail outlets would bear the entire tax burden of $50 per ounce of marijuana.Explain what would need to be true about the demand for marijuana for retailers to bear the entire burden of this tax, and if this would likely occur if marijuana sales were legalized.

According to the horizontal-equity principle of taxation,

Figure 18-7 Figure 18-7 shows the Lorenz curve for a hypothetical country. -Refer to Figure 18-7.The second highest 20 percent of households

If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods whose demand curves are elastic or inelastic?