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

According to the median voter theorem, the outcome of a majority vote is likely to represent the preferences of the voter who is in the political middle.

Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes.Assume the government defines a luxury home as a home that is purchased for at least $1 million.This tax is consistent with the

Which of the following is used to argue that the self-interest of public policymakers will often lead to actions that are inconsistent with the preferences of the voters they represent?

Figure 18-8 -Refer to Figure 18-8 to answer the following questions. a.Did the distribution of income become more equal in 2016 than it was in 2015, or did it become less equal? Explain. b.If area A = 1,900, area B = 450, and area C = 2,650, calculate the Gini coefficient for 2015 and the Gini coefficient for 2016.

Suppose the government imposes an 8 percent sales tax on clothing items and the tax is levied on sellers.Who pays for the tax in this situation? (Assume that the demand curve is downward sloping and that the supply curve is upward sloping.)

A CBO study estimated that the excess burden from the corporate income tax ________ of the revenues raised by the tax.This estimate would make the corporate income tax ________ imposed by the federal government.

Policymakers focus on marginal tax rate changes when making changes in the tax code because the marginal tax rate

The "ability-to-pay" principle of taxation is the normative idea that

If voters lack an economic incentive to become informed about pending legislation, then their preferences become a constraint on legislators voting for rent-seeking legislation.

Rapid economic growth tends to increase the degree of income mobility.

For a given supply curve, the deadweight loss from the imposition of a tax is smaller if demand is more elastic.

Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are

Which of the following summarizes the information provided by a Lorenz curve?

Absolute poverty measures vary from country to country.For example, in 2017, the poverty line in the United States for a family of four was an annual income of $24,600, but economists often use a much lower threshold income of $1.25 per day when calculating the rate of poverty in poor countries.Using this $1.25-per-day measure of the poverty line, which of the following regions had the smallest percentage decrease in the percentage of the population in poverty from 1970 to 2010?

Table 18-7 Table 18-7 shows the amount of taxes paid on various levels of income. -Refer to Table 18-7.The tax system is

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.Colorado taxes marijuana with a 15% sales tax on recreational-use buyers and a 15% wholesale excise tax on producers, which equates to 50 percent of the total taxes paid by retail buyers and 50 percent paid by producers.Does this necessarily mean that buyers and producers will each bear 50 percent of the burden of the tax?

Which of the following tax systems would help reduce income inequality the most?

An example of a payroll tax in the United States is

When members of Congress vote to pass new legislation, they will

A marginal tax rate is calculated as