Exam 18: Public Choice, taxes, and the Distribution of Income

Article Summary Monthly marijuana sales in Colorado topped $100 million for the first time in August,2015,with $59.2 million in recreational sales and $41.4 million in medical sales.Colorado has levied three types of state taxes on recreational-use marijuana: a 2.9% standard sales tax,a 10% special marijuana sales tax,and a 15% excise tax on wholesale marijuana transfers.The 15% excise tax is earmarked for school construction projects.In August,recreational-use taxes and fees totaled $11.2 million and medical taxes and fees were $2 million,bringing total revenue-to-date for the year to over $86 million. -Refer to the Article Summary.Colorado taxes marijuana with a 12.9% sales tax on buyers and a 15% wholesale excise tax on producers,or a total tax of 27.9% Suppose the actual burden of the tax falls 80 percent on consumers and 20 percent on producers.In this case,consumers will actually bear the tax burden of about ________ percent of the selling price and producers will actually bear the tax burden of ________ percent of the selling price.

Figure 18-3 -Refer to Figure 18-3.The figure above shows a demand curve and two supply curves,one more elastic than the other.Use Figure 18-3 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?

What is logrolling?

What are the two types of taxes that working individuals pay on their earnings?

Which of the following statements about rent seeking is false?

If the government wants to minimize the welfare loss of a tax,it should tax goods with more inelastic demands or supplies.

Rapid economic growth tends to increase the degree of income mobility.

Incame Tax Bracket Mar ginal Tax Rate \ 0-8,000 12\% 8,001-22,000 17\% 22,001-48,000 25\% 48,001 and over 38\% Table 18-6 shows the income tax brackets and tax rates for single taxpayers in Calpernia. -Refer to Table 18-6.Sasha is a single taxpayer with an income of $60,000.What is his marginal tax rate and what is his average tax rate?

As the value of the Gini coefficient approaches zero

Logrolling may result in

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

If the marginal tax rate is less than the average tax rate as taxable income increases,the tax structure is

What is the voting paradox?

Congressman Gallstone seeks support from his colleagues for a bill he sponsors that will establish a new national park in his district.He offers to support Congresswoman Disrail's proposal to build a new library in her district in exchange for her vote for his national park bill.This is an example of

When the demand for a product is less elastic than the supply

In reference to the federal income tax system,a tax bracket is

The decision to make the U.S.income tax system progressive was

Compare the distribution of income in the United States with the distribution of income in other high-income countries.

Which of the following is the source of revenue for Medicare and Social Security in the United States?

The government of Silverado raises revenue through a general income tax paid by all its residents to operate the city's marina.The marina is used by private boat owners.This method of raising revenue to operate the marina is