Question 1

Vertical equity focuses on measurement of the tax base,and horizontal equity focuses on the tax rate structure.

Accepted Answer

A) True 
 B)False

Question 2

Tax liability divided by taxable income equals marginal tax rate.

Accepted Answer

A) True 
 B)False

Question 3

A tax meets the standard of sufficiency if it is easy for people to pay the tax.

Accepted Answer

A) True 
 B)False

Question 4

The city of Berne recently enacted a 10% tax on the price of a subway ticket.Consequently,Mrs.Lane now walks to work instead of taking the subway.Her behavior illustrates the substitution effect of a tax increase.

Accepted Answer

A) True 
 B)False

Question 5

A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government.

Accepted Answer

A) True 
 B)False

Question 6

Tax systems with regressive rate structures result in a proportionally heavier tax burden on persons with smaller tax bases.

Accepted Answer

A) True 
 B)False

Question 7

The U.S.individual income tax has always used a progressive rate structure.

Accepted Answer

A) True 
 B)False

Question 8

Jurisdiction M imposes an individual income tax based on the following schedule.     Ms.Owen has $314,000 taxable income.Compute the tax on this income.

Accepted Answer

A) $29,680 
B) $28,180 
C) $37,680 
D) None of the choices are correct. 
A) $29,680 
B) $28,180 
C) $37,680 
D) None of the choices are correct.

Question 9

Government officials of Country Z estimate that next year's public programs will cost $19 million but that tax revenues will be only $15 million.Which of the following statements is false?

Accepted Answer

A) Country Z's tax system is sufficient. 
B) Country Z's government is engaging in deficit spending. 
C) If Country Z must borrow $4 million to pay for its public programs,its national debt will increase by $4 million. 
D) Country Z's government could balance its budget by eliminating a program that costs $4 million. 
A) Country Z's tax system is sufficient. 
B) Country Z's government is engaging in deficit spending. 
C) If Country Z must borrow $4 million to pay for its public programs,its national debt will increase by $4 million. 
D) Country Z's government could balance its budget by eliminating a program that costs $4 million.

Question 10

If State H increases its sales tax rate by 1%,its sales tax revenue must also increase by 1%.

Accepted Answer

A) True 
 B)False

Question 11

The statement that "an old tax is a good tax" means that:

Accepted Answer

A) Changes in the tax law create uncertainty in the business environment. 
B) Changes in the tax law disrupt traditional planning strategies. 
C) Changes in the tax law increase the compliance burden on businesses. 
D) All of the above. 
A) Changes in the tax law create uncertainty in the business environment. 
B) Changes in the tax law disrupt traditional planning strategies. 
C) Changes in the tax law increase the compliance burden on businesses. 
D) All of the above.

Question 12

Which of the following statements concerning tax preferences is false?

Accepted Answer

A) Tax preferences increase the complexity of the law. 
B) Tax preferences raise additional revenue for the government. 
C) Tax preferences are government subsidies for targeted taxpayer activities. 
D) Tax preferences do not improve the accurate measurement of the tax base. 
A) Tax preferences increase the complexity of the law. 
B) Tax preferences raise additional revenue for the government. 
C) Tax preferences are government subsidies for targeted taxpayer activities. 
D) Tax preferences do not improve the accurate measurement of the tax base.

Question 13

Changes in the tax law intended to make the measurement of taxable income more precise usually make the tax law less complex.

Accepted Answer

A) True 
 B)False

Question 14

Congress originally enacted the federal estate and gift taxes to improve:

Accepted Answer

A) Distributional justice 
B) Economic efficiency 
C) Vertical equity 
D) Horizontal equity 
A) Distributional justice 
B) Economic efficiency 
C) Vertical equity 
D) Horizontal equity

Question 15

The City of Willford levies a flat 7% tax on individual income in excess of $55,000.Individuals who earn $55,000 or less pay no income tax.
A.Ms.Vello earned $127,200 income this year.Compute her city income tax and determine her average tax rate.
B.Mr.Sui earned $68,900 income this year.Compute his city income tax and determine his average tax rate.
C.Does Willford have a proportionate,progressive,or regressive tax rate structure?

Accepted Answer

A.Ms.Vello's tax is $5,054 ($72,200 × 7%

Question 16

A dynamic forecast of the incremental revenue from a tax rate increase presumes that:

Accepted Answer

A) Taxpayers will not change their behavior because of the rate increase. 
B) The tax base will increase by the same proportion as the rate increase. 
C) The tax base will decrease by the same proportion as the rate increase. 
D) The tax rate and the tax base are correlated. 
A) Taxpayers will not change their behavior because of the rate increase. 
B) The tax base will increase by the same proportion as the rate increase. 
C) The tax base will decrease by the same proportion as the rate increase. 
D) The tax rate and the tax base are correlated.

Question 17

Jurisdiction M imposes an individual income tax based on the following schedule.     Which of the following statements is true?

Accepted Answer

A) If Mrs.Hall's taxable income is $227,000,her average tax rate is 12%. 
B) If Mr.Poe's taxable income is $41,200,his marginal tax rate is 8%. 
C) If Ms.Kaye's taxable income is $63,800,her marginal tax rate is 8%. 
D) None of the choices are correct. 
A) If Mrs.Hall's taxable income is $227,000,her average tax rate is 12%. 
B) If Mr.Poe's taxable income is $41,200,his marginal tax rate is 8%. 
C) If Ms.Kaye's taxable income is $63,800,her marginal tax rate is 8%. 
D) None of the choices are correct.

Question 18

Jurisdiction M imposes an individual income tax based on the following schedule.     Which of the following statements is false?

Accepted Answer

A) If Ms.Lui's taxable income is $33,400,her average tax rate is 5%. 
B) If Mr.Bell's taxable income is $519,900,his marginal tax rate is 12%. 
C) If Ms.Vern's taxable income is $188,000,her average tax rate is 7.2%. 
D) None of the choices are false. 
A) If Ms.Lui's taxable income is $33,400,her average tax rate is 5%. 
B) If Mr.Bell's taxable income is $519,900,his marginal tax rate is 12%. 
C) If Ms.Vern's taxable income is $188,000,her average tax rate is 7.2%. 
D) None of the choices are false.

Question 19

Which of the following statements does not describe the Keynesian standard of tax efficiency?

Accepted Answer

A) An efficient tax encourages economic growth. 
B) An efficient tax encourages full employment. 
C) An efficient tax encourages price-level stability. 
D) All of the above describe the Keynesian standard of tax efficiency. 
A) An efficient tax encourages economic growth. 
B) An efficient tax encourages full employment. 
C) An efficient tax encourages price-level stability. 
D) All of the above describe the Keynesian standard of tax efficiency.

Question 20

Vervet County levies a real property tax based on the following schedule.     Which of the following statements is false?

Accepted Answer

A) If Mr.Clem owns real property valued at $112,500,his average tax rate is 3%. 
B) If Ms.Barker owns real property valued at $455,650,her average tax rate is 2.1%. 
C) If Ms.Lumley owns real property valued at $750,000,her marginal tax rate is 1%. 
D) None of the choices are false. 
A) If Mr.Clem owns real property valued at $112,500,his average tax rate is 3%. 
B) If Ms.Barker owns real property valued at $455,650,her average tax rate is 2.1%. 
C) If Ms.Lumley owns real property valued at $750,000,her marginal tax rate is 1%. 
D) None of the choices are false.

Vertical equity focuses on measurement of the tax base,and horizontal equity focuses on the tax rate structure.

Tax liability divided by taxable income equals marginal tax rate.

A tax meets the standard of sufficiency if it is easy for people to pay the tax.

The city of Berne recently enacted a 10% tax on the price of a subway ticket.Consequently,Mrs.Lane now walks to work instead of taking the subway.Her behavior illustrates the substitution effect of a tax increase.

A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government.

Tax systems with regressive rate structures result in a proportionally heavier tax burden on persons with smaller tax bases.

The U.S.individual income tax has always used a progressive rate structure.

Jurisdiction M imposes an individual income tax based on the following schedule. Ms.Owen has $314,000 taxable income.Compute the tax on this income.

Government officials of Country Z estimate that next year's public programs will cost $19 million but that tax revenues will be only $15 million.Which of the following statements is false?

If State H increases its sales tax rate by 1%,its sales tax revenue must also increase by 1%.

The statement that "an old tax is a good tax" means that:

Which of the following statements concerning tax preferences is false?

Changes in the tax law intended to make the measurement of taxable income more precise usually make the tax law less complex.

Congress originally enacted the federal estate and gift taxes to improve:

A dynamic forecast of the incremental revenue from a tax rate increase presumes that:

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is false?

Which of the following statements does not describe the Keynesian standard of tax efficiency?

Vervet County levies a real property tax based on the following schedule. Which of the following statements is false?

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

Vertical equity focuses on measurement of the tax base,and horizontal equity focuses on the tax rate structure.

Tax liability divided by taxable income equals marginal tax rate.

A tax meets the standard of sufficiency if it is easy for people to pay the tax.

The city of Berne recently enacted a 10% tax on the price of a subway ticket.Consequently,Mrs.Lane now walks to work instead of taking the subway.Her behavior illustrates the substitution effect of a tax increase.

A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government.

Tax systems with regressive rate structures result in a proportionally heavier tax burden on persons with smaller tax bases.

The U.S.individual income tax has always used a progressive rate structure.

Jurisdiction M imposes an individual income tax based on the following schedule. Ms.Owen has $314,000 taxable income.Compute the tax on this income.

Government officials of Country Z estimate that next year's public programs will cost $19 million but that tax revenues will be only $15 million.Which of the following statements is false?

If State H increases its sales tax rate by 1%,its sales tax revenue must also increase by 1%.

The statement that "an old tax is a good tax" means that:

Which of the following statements concerning tax preferences is false?

Changes in the tax law intended to make the measurement of taxable income more precise usually make the tax law less complex.

Congress originally enacted the federal estate and gift taxes to improve:

A dynamic forecast of the incremental revenue from a tax rate increase presumes that:

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is false?

Which of the following statements does not describe the Keynesian standard of tax efficiency?

Vervet County levies a real property tax based on the following schedule. Which of the following statements is false?

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