Question 1

The city of Belleview operated at an $865,000 surplus this year.The surplus suggests that the municipal tax system is:

Accepted Answer

A) Fair 
B) Efficient 
C) Sufficient 
D) Convenient 
A) Fair 
B) Efficient 
C) Sufficient 
D) Convenient

Question 2

Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?

Accepted Answer

A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax. 
A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax.

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements concerning the federal Social Security tax is true?

Accepted Answer

A) The tax burden increases annually because the rate generally increases annually. 
B) The tax burden increases annually because the base generally increases annually. 
C) Both the rate and the base generally increase annually. 
D) The Social Security tax burden has not increased since 1990. 
A) The tax burden increases annually because the rate generally increases annually. 
B) The tax burden increases annually because the base generally increases annually. 
C) Both the rate and the base generally increase annually. 
D) The Social Security tax burden has not increased since 1990.

Question 5

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

Accepted Answer

A) Repealing the federal estate and gift taxes 
B) Increasing the highest marginal income tax rate by 10% 
C) Replacing the progressive income tax rate structure with a flat rate 
D) Replacing the income tax with a national sales tax 
A) Repealing the federal estate and gift taxes 
B) Increasing the highest marginal income tax rate by 10% 
C) Replacing the progressive income tax rate structure with a flat rate 
D) Replacing the income tax with a national sales tax

Question 6

Supply-side economic theory.

Accepted Answer

A) Predicts that a decrease in the highest income tax rates will cause an increase in government revenues. 
B) Is inconsistent with the substitution effect. 
C) Was a clear failure following the Reagan administration tax cuts of the 1980s. 
D) Predicts that taxpayers will save their tax windfall from a rate cut rather than spend or investment the windfall. 
A) Predicts that a decrease in the highest income tax rates will cause an increase in government revenues. 
B) Is inconsistent with the substitution effect. 
C) Was a clear failure following the Reagan administration tax cuts of the 1980s. 
D) Predicts that taxpayers will save their tax windfall from a rate cut rather than spend or investment the windfall.

Question 7

According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.

Accepted Answer

A) True 
 B)False

Question 8

Supply-side economic theory holds that people who benefit from a tax rate reduction will spend their tax windfall on consumption goods.

Accepted Answer

A) True 
 B)False

Question 9

Last year,Government G levied a 35% tax on individual income,and Mr.Slate paid $35,000 tax on his $100,000 income.This year,the government increased the tax rate to 40%.Which of the following statements is false?

Accepted Answer

A) Based on a static forecast,government G should collect $5,000 additional tax from Mr.Slate this year. 
B) If Mr.Slate took a second job to maintain his after-tax disposable income,his behavior illustrates a substitution effect of the rate increase. 
C) If Mr.Slate took a second job to maintain his after-tax disposable income,government G should collect more than $5,000 additional tax from him this year. 
D) If Mr.Slate sold an income-generating investment and used the money for personal consumption,his behavior illustrates a substitution effect of the rate increase. 
A) Based on a static forecast,government G should collect $5,000 additional tax from Mr.Slate this year. 
B) If Mr.Slate took a second job to maintain his after-tax disposable income,his behavior illustrates a substitution effect of the rate increase. 
C) If Mr.Slate took a second job to maintain his after-tax disposable income,government G should collect more than $5,000 additional tax from him this year. 
D) If Mr.Slate sold an income-generating investment and used the money for personal consumption,his behavior illustrates a substitution effect of the rate increase.

Question 10

A provision in the tax law designed to encourage a specific economic behavior is a tax preference.

Accepted Answer

A) True 
 B)False

Question 11

Many taxpayers believe the income tax system is unfair because it is so complicated.

Accepted Answer

A) True 
 B)False

Question 12

The government of Nation C operated at a $32 billion deficit this year.The deficit suggests that Nation C's tax system is:

Accepted Answer

A) Inefficient 
B) Insufficient 
C) Unfair 
D) Inconvenient 
A) Inefficient 
B) Insufficient 
C) Unfair 
D) Inconvenient

Question 13

Vervet County levies a real property tax based on the following schedule.     Bilex Inc.owns real property valued at $629,800.Compute Bilex's tax on this property.

Accepted Answer

A) $13,798 
B) $7,500 
C) $6,298 
D) None of the choices are correct. 
A) $13,798 
B) $7,500 
C) $6,298 
D) None of the choices are correct.

Question 14

Which of the following statements about horizontal equity is false?

Accepted Answer

A) Horizontal equity focuses on a rational and impartial measurement of the tax base. 
B) Horizontal equity focuses on the measurement of taxpayers' ability to pay. 
C) If persons with equal ability to pay a tax owe an equal amount of tax,the tax is horizontally equitable. 
D) None of the above is false. 
A) Horizontal equity focuses on a rational and impartial measurement of the tax base. 
B) Horizontal equity focuses on the measurement of taxpayers' ability to pay. 
C) If persons with equal ability to pay a tax owe an equal amount of tax,the tax is horizontally equitable. 
D) None of the above is false.

Question 15

Vervet County levies a real property tax based on the following schedule.     Which type of rate structure does this tax use?

Accepted Answer

A) Proportionate 
B) Regressive 
C) Progressive 
D) Dual-bracket 
A) Proportionate 
B) Regressive 
C) Progressive 
D) Dual-bracket

Question 16

Individuals who believe that a tax system is fair are less likely to cheat on their taxes than individuals who believe that the system is unfair.

Accepted Answer

A) True 
 B)False

Question 17

The Internal Revenue Service's cost of collecting $100 of tax revenue is about $3.

Accepted Answer

A) True 
 B)False

Question 18

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?

Accepted Answer

A) The rate change would improve the neutrality of the excise tax. 
B) The rate change would improve the convenience of the tax. 
C) The rate change is intended to affect social behavior. 
D) Both the rate change would improve the convenience of the tax and the rate change is intended to affect social behavior are true. 
A) The rate change would improve the neutrality of the excise tax. 
B) The rate change would improve the convenience of the tax. 
C) The rate change is intended to affect social behavior. 
D) Both the rate change would improve the convenience of the tax and the rate change is intended to affect social behavior are true.

Question 19

A static forecast of the revenue effect of a tax rate change assumes that the tax base does not change.

Accepted Answer

A) True 
 B)False

Question 20

According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.

Accepted Answer

A) True 
 B)False

The city of Belleview operated at an $865,000 surplus this year.The surplus suggests that the municipal tax system is:

Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?

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.

Which of the following statements concerning the federal Social Security tax is true?

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

Supply-side economic theory.

According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.

Supply-side economic theory holds that people who benefit from a tax rate reduction will spend their tax windfall on consumption goods.

Last year,Government G levied a 35% tax on individual income,and Mr.Slate paid $35,000 tax on his $100,000 income.This year,the government increased the tax rate to 40%.Which of the following statements is false?

A provision in the tax law designed to encourage a specific economic behavior is a tax preference.

Many taxpayers believe the income tax system is unfair because it is so complicated.

The government of Nation C operated at a $32 billion deficit this year.The deficit suggests that Nation C's tax system is:

Vervet County levies a real property tax based on the following schedule. Bilex Inc.owns real property valued at $629,800.Compute Bilex's tax on this property.

Which of the following statements about horizontal equity is false?

Vervet County levies a real property tax based on the following schedule. Which type of rate structure does this tax use?

Individuals who believe that a tax system is fair are less likely to cheat on their taxes than individuals who believe that the system is unfair.

The Internal Revenue Service's cost of collecting $100 of tax revenue is about $3.

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?

A static forecast of the revenue effect of a tax rate change assumes that the tax base does not change.

According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.

Taxes and Taxing Jurisdictions

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters

Exam 2: Policy Standards for a Good Tax

The city of Belleview operated at an $865,000 surplus this year.The surplus suggests that the municipal tax system is:

Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?

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.

Which of the following statements concerning the federal Social Security tax is true?

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

Supply-side economic theory.

According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.

Supply-side economic theory holds that people who benefit from a tax rate reduction will spend their tax windfall on consumption goods.

Last year,Government G levied a 35% tax on individual income,and Mr.Slate paid $35,000 tax on his $100,000 income.This year,the government increased the tax rate to 40%.Which of the following statements is false?

A provision in the tax law designed to encourage a specific economic behavior is a tax preference.

Many taxpayers believe the income tax system is unfair because it is so complicated.

The government of Nation C operated at a $32 billion deficit this year.The deficit suggests that Nation C's tax system is:

Vervet County levies a real property tax based on the following schedule. Bilex Inc.owns real property valued at $629,800.Compute Bilex's tax on this property.

Which of the following statements about horizontal equity is false?

Vervet County levies a real property tax based on the following schedule. Which type of rate structure does this tax use?

Individuals who believe that a tax system is fair are less likely to cheat on their taxes than individuals who believe that the system is unfair.

The Internal Revenue Service's cost of collecting $100 of tax revenue is about $3.

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?

A static forecast of the revenue effect of a tax rate change assumes that the tax base does not change.

According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.

Taxes and Taxing Jurisdictions

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, Partnerships, llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters