Exam 2: Policy Standards for a Good Tax

Congress recently amended the tax law to make it easier for individuals to file their income tax returns electronically (online). Which of the following statements is true?

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

Congress plans to amend the federal income tax to provide a deduction for the first $2,400 of residential rent paid by families with incomes below the federal poverty level. Which of the following statements is true?

The federal Social Security tax burden on employees has not increased since 1990 because the tax rate has not increased since that year.

Which of the following statements about a proportionate income tax rate structure is false?

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

Which of the following statements about the substitution effect of an income tax rate increase is false?

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 concerning the standard of fairness is false?

Which of the following statements about a regressive tax rate structure is false?

The city of Hartwell spends about $3 million annually on snow removal. The city is considering amending its real property tax law to allow homeowners to offset the cost of private snow removal against their annual property tax liability. This amendment would affect the:

Congress plans to amend the federal individual income tax to eliminate the deductions for medical care, educational savings, charitable contributions, and home mortgage interest. Which of the following statements is true?

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

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

Which of the following statements about the income effect of an income tax rate increase is true?

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

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

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

The federal income tax law allows individuals whose property is destroyed by a natural disaster such as a fire or hurricane to reduce their taxable income by the amount of their financial loss. This rule is intended to improve the: