Question 1

If a tax has a proportionate rate structure, a taxpayer's marginal rate and average rate are equal.

Accepted Answer

A) True 
 B)False

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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?

Accepted Answer

A) The amendment will reduce the complexity of the tax. 
B) The amendment will increase the horizontal equity of the tax. 
C) The amendment will increase the neutrality of the tax. 
D) Statements A.and C.are true. 
A) The amendment will reduce the complexity of the tax. 
B) The amendment will increase the horizontal equity of the tax. 
C) The amendment will increase the neutrality of the tax. 
D) Statements A.and C.are true.

Question 5

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 *

Question 6

Which of the following statements regarding a convenient tax is false?

Accepted Answer

A) From the government's viewpoint, a good tax should be convenient to administer. 
B) From the taxpayer's viewpoint, a good tax should be convenient to pay. 
C) A convenient tax should have a method of collection that offers maximum opportunity for noncompliance. 
D) A convenient tax should permit taxpayers to compute their tax with reasonable certainty without incurring undue costs. 
A) From the government's viewpoint, a good tax should be convenient to administer. 
B) From the taxpayer's viewpoint, a good tax should be convenient to pay. 
C) A convenient tax should have a method of collection that offers maximum opportunity for noncompliance. 
D) A convenient tax should permit taxpayers to compute their tax with reasonable certainty without incurring undue costs.

Question 7

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 above is 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 above is false.

Question 8

A dynamic 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 9

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

Accepted Answer

A) True 
 B)False

Question 10

The sales tax laws of many states exempt the purchase of groceries and prescription drugs from tax. Such exemptions are intended to improve the:

Accepted Answer

A) Convenience of the tax 
B) Equity of the tax 
C) Sufficiency of the tax 
D) Neutrality of the tax 
A) Convenience of the tax 
B) Equity of the tax 
C) Sufficiency of the tax 
D) Neutrality of the tax

Question 11

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 12

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 13

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 14

The declining marginal utility of income across individuals can be measured empirically.

Accepted Answer

A) True 
 B)False

Question 15

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 16

Which of the following describes a tax that meets the standard of convenience?

Accepted Answer

A) A tax that the government can administer without excessive cost. 
B) A tax that is easy for taxpayers to compute and pay. 
C) A tax that minimizes the opportunity for noncompliance. 
D) All of the above describe a convenient tax. 
A) A tax that the government can administer without excessive cost. 
B) A tax that is easy for taxpayers to compute and pay. 
C) A tax that minimizes the opportunity for noncompliance. 
D) All of the above describe a convenient tax.

Question 17

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

Accepted Answer

A) A theoretic justification for a proportionate rate is its superior potential for wealth redistribution. 
B) Under a proportionate rate structure, the marginal rate equals the average rate. 
C) Under a proportionate rate structure, the taxpayer with the least income pays the same percentage of income to the government as the taxpayer with the most income. 
D) None of the above is false. 
A) A theoretic justification for a proportionate rate is its superior potential for wealth redistribution. 
B) Under a proportionate rate structure, the marginal rate equals the average rate. 
C) Under a proportionate rate structure, the taxpayer with the least income pays the same percentage of income to the government as the taxpayer with the most income. 
D) None of the above is false.

Question 18

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?

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 19

State use taxes are more convenient for individual consumers than state sales taxes.

Accepted Answer

A) True 
 B)False

Question 20

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

If a tax has a proportionate rate structure, a taxpayer's marginal rate and average rate are equal.

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

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

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?

Which of the following statements regarding a convenient tax is false?

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

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

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

The sales tax laws of many states exempt the purchase of groceries and prescription drugs from tax. Such exemptions are intended to improve the:

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

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?

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.

The declining marginal utility of income across individuals can be measured empirically.

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

Which of the following describes a tax that meets the standard of convenience?

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

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?

State use taxes are more convenient for individual consumers than state sales taxes.

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

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

If a tax has a proportionate rate structure, a taxpayer's marginal rate and average rate are equal.

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

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

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?

Which of the following statements regarding a convenient tax is false?

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

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

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

The sales tax laws of many states exempt the purchase of groceries and prescription drugs from tax. Such exemptions are intended to improve the:

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

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?

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.

The declining marginal utility of income across individuals can be measured empirically.

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

Which of the following describes a tax that meets the standard of convenience?

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

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?

State use taxes are more convenient for individual consumers than state sales taxes.

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

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