Deck 17: Taxes on Wealth, Property and Estates

Question 1

A tax on the value of land is likely to be fully capitalized.

Answer 1

True

Question 2

A general tax on wealth will cause efficiency loss in labor markets.

Answer 2

False

Question 3

If a real estate tax causes rents to rise, it cannot be fully capitalized.

Answer 3

True

Question 4

A wealth tax is equivalent to a tax on the return to saving.

Question 5

If the supply of savings is perfectly inelastic, a comprehensive wealth tax will increase the market rate of interest.

Question 6

The local property tax, as administered in the United States, is a general tax on wealth.

Question 7

As administered in the United States, the local property tax is mainly a tax on real estate.

Question 8

Wealth is:

A) a flow.
B) a stock.
C) the market value of accumulated assets.
D) both b and c

Question 9

If a local property tax increase is fully capitalized, property owners at the time of the increase can?not shift any of the current or future tax increase to buyers if they sell the property.

Question 10

The local property tax in the United States will reduce the return to real estate only in the long run.

Question 11

The property tax in the United States is likely to reduce the equilibrium return to investment.

Question 12

The local property tax is likely to result in less than the efficient amount of investment in real estate.

Question 13

Other things being equal, if the property tax rate is above the national average for a jurisdiction, capital can be expected to flow out of the region in that area.

Question 14

Assuming that the supply curve of savings is upward sloping, a comprehensive wealth tax will reduce annual investment.

Question 15

Wealth is a flow.

Question 16

Wealth taxes are a relatively new form of taxation.

Question 17

Total wealth definitions never include intangible personal property.

Question 18

A comprehensive wealth tax base includes:

A) all real tangible, intangible, and human wealth, less any claims against those assets.
B) only real property.
C) only intangible assets.
D) only tangible assets.

Question 19

A person who never saves any income and receives no gifts and inheritances will never accumulate wealth.

Question 20

The town of Oz has raised its property tax rates considerably above the national average. Other things being equal, capital is likely to flow into Oz in the long run because of the tax.

Question 21

If the annual amount of savings is $10 billion, what is the effect of a wealth tax assuming supply is responsive?

A) annual savings remains $10 billion
B) annual savings increases above $10 billion
C) annual savings falls below $10 billion
D) no particular effect is guaranteed to happen

Question 22

A local property tax, such as that used in the United States, is likely to:

A) increase investment in the economy.
B) cause a flow of investment among jurisdictions.
C) decrease the return to saving in all uses.
D) both b and c

Question 23

If a property tax on real estate is capitalized,

A) the price of real estate will rise.
B) the price of real estate will fall.
C) the price of real estate will be unaffected.
D) the burden of the tax will be transferred to buyers of real estate.
E) both b and d.

Question 24

Taxes on wealth are favored by those who want to increase the taxes paid by the rich. Is the inci?dence of a comprehensive wealth tax likely to be progressive? Is the property tax, as used in the United States, a comprehensive wealth tax? Evaluate the incidence and effects on efficiency of the property tax in the United States. Why do some critics of the tax argue that it is regressive? Do you agree with their arguments?

Question 25

If the interest elasticity of supply of savings is zero, a comprehensive wealth tax will:

A) increase the market rate of interest.
B) reduce the income of savers.
C) reduce the income of workers.
D) both b and c

Question 26

From the point of view of the locality, increasing property taxes:

A) increases the price of locally produced goods.
B) decreases income of owners of land in the associated community.
C) does not affect buyers of locally produced goods fro outside of the community.
D) both a and b

Question 27

The local property tax in the United States is levied primarily on:

A) personal property.
B) intangible property.
C) business property.
D) real estate.

Question 28

Assuming that investors seek to maximize the return on their investment, the long-run effect of a national tax on real estate will be to:

A) reduce the return to investment in real estate only.
B) reduce the return to investment in all assets.
C) reduce wages only.
D) increase the return to all investors.

Question 29

If a tax on real estate results in a decrease in the supply of housing, the tax will be:

A) fully capitalized.
B) only partially capitalized.
C) not capitalized at all.
D) borne entirely by renters.

Question 30

A comprehensive wealth tax will:

A) impair efficiency in labor markets.
B) impair efficiency in investment markets.
C) both a and b
D) have no excess burden.

Question 31

Which of the following would not be included in a comprehensive wealth tax base?

A) real estate
B) personal property
C) intangible assets
D) residential rents

Question 32

If the supply curve of savings is upward sloping, a comprehensive wealth tax will:

A) increase the market rate of interest.
B) reduce the market rate of interest.
C) have zero excess burden.
D) have no effect on investment.

Question 33

Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:

A) falls from $60,000 to $30,000.
B) increases from $30,000 to $60,000.
C) falls 10 percent.
D) falls 20 percent.

Question 34

If the supply of real estate is not perfectly inelastic, then the local real estate property tax differentials:

A) cannot be shifted to tenants.
B) can be shifted to tenants through increases in rents.
C) will be fully capitalized.
D) both a and c

Question 35

If the supply of saving is not perfectly inelastic in the nation, then which of the following taxes will cause efficiency loss in capital markets?

A) a general wealth tax
B) a national tax on real estate
C) a consumption tax
D) both a and b

Question 36

Intangible personal property includes:

A) stock in companies.
B) corporate bonds.
C) cash.
D) all of the above

Question 37

If the annual amount of savings is $10 billion, what is the effect of a wealth tax assuming supply is perfectly inelastic?

A) annual savings remains $10 billion
B) annual savings increases above $10 billion
C) annual savings falls below $10 billion
D) no particular effect is guaranteed to happen

Question 38

If the supply of saving is not perfectly inelastic, then substituting a value-added tax for an equal-yield general wealth tax will:

A) decrease market equilibrium interest rates.
B) increase the efficiency loss in labor markets.
C) decrease the efficiency loss in labor markets.
D) decrease efficiency in capital markets.
E) both a and b

Question 39

Tax capitalization is:

A) a decrease in the value of a taxed asset at a level related to the discounted value of the future tax liability.
B) partially recognized when the supply of taxed asset is perfectly inelastic.
C) only partially recognized on assets like land.
D) both b and c