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

Table 18-1 Suppose $1 billion is available in the budget and Congress is considering allocating the funds to one of the following three alternatives: 1)Subsidies for education, 2)Research on Alzheimer's or 3)Increased border security. Table 18-1 shows three voters' rankings of the alternatives. -Refer to Table 18-1.Suppose a series of votes are taken in which each pair of alternatives is considered in turn.The first pair considered is between subsidies for education and research on Alzheimer's.The second pair considered is between Alzheimer's research and increased border security.The third pair considered is between education subsidies and increased border security.In this case, the collective preferences of the voters

There is a difference between who is legally required to send a tax payment to the government and who bears the burden of the tax.Which of the following would have the most impact on who bears the burden of an excise tax?

Table 18-10 Table 18-10 shows the income tax brackets and tax rates for single taxpayers in Bauxhall. -Refer to Table 18-10.A tax exemption is granted for the first $10,000 earned per year.Suppose you earn $75,000. a.What is the amount of taxes you will pay? b.What is your average tax rate? c.What is your marginal tax rate?

A Gini coefficient of ________ means that an income distribution is perfectly equal and a Gini coefficient of ________ means the income distribution is perfectly unequal.

In 2016, which type of tax raised the most revenue for the U.S.federal government? Which type of tax raised the most revenue for state and local governments?

What is the poverty rate?

As the value of the Gini coefficient approaches zero

Since lower-income people spend a larger proportion of their incomes on groceries than do higher-income people, if grocery stores were required by law to charge a 10-cent fee for disposable bags, this fee could be considered a

Over the past 40 years in the United States, federal revenues as a share of gross domestic product have

Rent-seeking behavior, unlike profit-maximizing behavior in competitive markets, wastes society's scarce resources.

What is a Lorenz curve and what is a Gini coefficient?

Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. -Refer to Figure 18-2.If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax

Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Figure 18-1 -Refer to Figure 18-1.Area B + C + F + G represents

Describe the main factors economists believe cause inequality of income.

Is a typical person likely to gather more information when buying a new computer or when voting for a member of the U.S.Senate? Why?

At the state and local levels in the United States, the largest source of tax revenue is

Table 18-12 Table 18-12 shows income distribution data for two countries. Use this data to answer the following questions. -Refer to Table 18-12. 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 complexity of the U.S.federal income tax system results in significant annual deadweight losses.The opportunity cost of the hours taxpayers spend on record keeping and completing their tax returns amounts to billions of dollars. a.If the tax system was simplified, how would this benefit the economy? b.Why hasn't the tax system been simplified?

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is