Question 1

A good tax should result in either horizontal or vertical equity across taxpayers.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements concerning income tax rate structures is false?

Accepted Answer

A) Under a progressive rate structure, the marginal rate and the average rate are equal. 
B) Under a regressive rate structure, the average rate for low-income individuals is more than the average rate for high-income individuals. 
C) Under either a regressive, proportionate, or progressive rate structure, high-income taxpayers pay more dollars of tax than low-income individuals. 
D) In theory, a progressive rate structure results in equal economic sacrifice across taxpayers. 
A) Under a progressive rate structure, the marginal rate and the average rate are equal. 
B) Under a regressive rate structure, the average rate for low-income individuals is more than the average rate for high-income individuals. 
C) Under either a regressive, proportionate, or progressive rate structure, high-income taxpayers pay more dollars of tax than low-income individuals. 
D) In theory, a progressive rate structure results in equal economic sacrifice across taxpayers.

Question 4

Mr. and Mrs. Boln earn $63,000 annual income and pay 20% in state and federal income tax. If tax rates increase so that the couple's annual rate increases to 25%, how much additional income must they earn to maintain their after-tax standard of living?

Accepted Answer

The Bolns' after-tax income before the r

Question 5

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 6

Government J decides that it must increase its tax revenue. Which of the strategies should result in more revenue?

Accepted Answer

A) Increase the rate of an existing tax. 
B) Expand the base of an existing tax. 
C) Enact a tax on a new base. 
D) All of these strategies should result in more revenue for Government J. 
A) Increase the rate of an existing tax. 
B) Expand the base of an existing tax. 
C) Enact a tax on a new base. 
D) All of these strategies should result in more revenue for Government J.

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) The income effect is theoretically stronger for low-income taxpayers than for high-income taxpayers. 
B) The income effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner. 
C) The income effect motivates individuals to find ways to increase their before-tax income. 
D) Both A.and C.are true. 
A) The income effect is theoretically stronger for low-income taxpayers than for high-income taxpayers. 
B) The income effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner. 
C) The income effect motivates individuals to find ways to increase their before-tax income. 
D) Both A.and C.are true.

Question 11

The state of California plans to amend its personal income tax laws to allow parents to reduce their tax by the cost of infant car seats. Which of the following statements is true?

Accepted Answer

A) The amendment creates a tax preference for parents who purchase infant car seats. 
B) The amendment is intended to change social behavior. 
C) The amendment increases the neutrality of the tax law. 
D) Statements A.and B.are true. 
A) The amendment creates a tax preference for parents who purchase infant car seats. 
B) The amendment is intended to change social behavior. 
C) The amendment increases the neutrality of the tax law. 
D) Statements A.and B.are true.

Question 12

The federal government is not required to pay interest on the national debt.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 above is true. 
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 above is true.

Question 15

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 16

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

Accepted Answer

A) The substitution effect is theoretically stronger for high-income taxpayers than for low-income taxpayers. 
B) The substitution effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner. 
C) The substitution effect is theoretically stronger for self-employed individuals who control their own time than for employees whose work schedules are controlled by their employers. 
D) None of the above is false. 
A) The substitution effect is theoretically stronger for high-income taxpayers than for low-income taxpayers. 
B) The substitution effect is theoretically stronger for a family's secondary wage earner than for the family's primary wage earner. 
C) The substitution effect is theoretically stronger for self-employed individuals who control their own time than for employees whose work schedules are controlled by their employers. 
D) None of the above is false.

Question 17

Which of the following statements concerning a regressive tax rate structure is true?

Accepted Answer

A) A regressive tax rate structure is justified by the tax policy of distributive justice. 
B) A regressive rate structure is justified by the theory of the declining marginal utility of income. 
C) Under a regressive rate structure, the average tax rate for high-income taxpayers is less than the marginal tax rate. 
D) None of the above statements is true. 
A) A regressive tax rate structure is justified by the tax policy of distributive justice. 
B) A regressive rate structure is justified by the theory of the declining marginal utility of income. 
C) Under a regressive rate structure, the average tax rate for high-income taxpayers is less than the marginal tax rate. 
D) None of the above statements is true.

Question 18

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 above is 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 above is false.

Question 19

Jurisdiction M imposes an individual income tax based on the following schedule.   Which type of rate structure does this tax use?

Accepted Answer

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

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

A good tax should result in either horizontal or vertical equity across taxpayers.

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

Which of the following statements concerning income tax rate structures is false?

Mr. and Mrs. Boln earn $63,000 annual income and pay 20% in state and federal income tax. If tax rates increase so that the couple's annual rate increases to 25%, how much additional income must they earn to maintain their after-tax standard of living?

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

Government J decides that it must increase its tax revenue. Which of the strategies should result in more revenue?

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.

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

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

The state of California plans to amend its personal income tax laws to allow parents to reduce their tax by the cost of infant car seats. Which of the following statements is true?

The federal government is not required to pay interest on the national debt.

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?

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

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

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

Which of the following statements concerning a regressive tax rate structure is true?

Vervet County levies a real property 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 type of rate structure does this tax use?

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 a Present Value of $1 B Present Value of Annuity of $1 C 2013 Income Tax Rates

Filters

Exam 2: Policy Standards for a Good Tax

A good tax should result in either horizontal or vertical equity across taxpayers.

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

Which of the following statements concerning income tax rate structures is false?

Mr. and Mrs. Boln earn $63,000 annual income and pay 20% in state and federal income tax. If tax rates increase so that the couple's annual rate increases to 25%, how much additional income must they earn to maintain their after-tax standard of living?

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

Government J decides that it must increase its tax revenue. Which of the strategies should result in more revenue?

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.

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

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

The state of California plans to amend its personal income tax laws to allow parents to reduce their tax by the cost of infant car seats. Which of the following statements is true?

The federal government is not required to pay interest on the national debt.

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?

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

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

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

Which of the following statements concerning a regressive tax rate structure is true?

Vervet County levies a real property 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 type of rate structure does this tax use?

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 a Present Value of $1 B Present Value of Annuity of $1 C 2013 Income Tax Rates

Filters