Exam 16: The Distribution of Income and Social Policy

If you pay $14 000 in taxes on an income of $125 000,and $17 400 in taxes on an income of $144000,what is your marginal tax rate? Show your work.

Consider a public good such as fire protection services.Rich people may benefit more than the poor from such a service because rich people stand to lose more from a fire that destroys property.In this case

There is a difference between who is legally required to send a tax payment to the government and who bears the burden of the tax.Which of the following would have the most impact on who bears the burden of an excise tax?

If you pay $2000 in taxes on an income of $20 000,and a tax of $3000 on an income of $30 000,then over this range of income the tax is

The federal government and some state governments levy taxes on specific goods such as petrol,cigarettes and beer.These are known as

Figure 16-3 -Refer to Figure 16-3.The figure above shows a demand curve and two supply curves,one more elastic than the other.Use Figure 16-3 to answer the following questions. a.Suppose the government imposes an excise tax of $1.00 on every unit sold.Use the graph to illustrate the impact of this tax. b.If the government imposes an excise tax of $1.00 on every unit sold,will the consumer pay more of the tax if the supply curve is S₁ or S₂? Refer to the graphs in your answer. c.If an excise tax of $1.00 on every unit sold is imposed,will the revenue collected by the government be greater if the supply curve is S₁ or S₂? d.If the government imposes an excise tax of $1.00 on every unit sold,will the deadweight loss be greater if the supply curve is S₁ or S₂?

Consider the following methods of taxing a corporation's income: A.A flat tax,as opposed to a progressive tax,is levied on corporate profits. B.A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits.The shareholder would then be required to include this amount as taxable income for her personal income tax.The corporation does not pay a tax. C.A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive,tax free,corporate dividends and capital gains. Which of the methods above would avoid double taxation?

As a group,people with high incomes are likely to have

Figure 16-6 Figure 16-6 shows the Lorenz curves for Islandia and Syldavia. -Refer to Figure 16-6.Which country has the more unequal distribution of income?

If you pay $2000 in taxes on an income of $20 000,and a tax of $3500 on an income of $30 000,then over this range of income the tax is

Which of the following is a transfer payment?

The term 'payroll taxes' is often used to refer to

'For a given supply curve,the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic.' This statement is

Figure 16-2 Figure 16-2 shows a demand curve and two sets of supply curves,one set more elastic than the other. -Refer to Figure 16-2.If the government imposes an excise tax of $1.00 on every unit sold,what is the size of the deadweight loss,if there is any?

The idea that individuals should be taxed in proportion to the marginal benefits that they receive from public goods is called

For a given supply curve,how does the elasticity of demand affect the burden of a tax imposed on a product?

Figure 16-2 Figure 16-2 shows a demand curve and two sets of supply curves,one set more elastic than the other. -Refer to Figure 16-2.If the government imposes an excise tax of $1.00 on every unit sold,the government's revenue from the tax is represented by the area

Holding all other factors constant,income earned from capital is more unequally distributed than income earned from labour.

The excess burden of a tax

Most economists agree that some of the burden of the corporate income tax