Question 1

The payroll tax is a

Accepted Answer

A)   progressive tax.
B)   neutral tax.
C)   regressive tax.
D)   proportional tax.E) A) and B)
F) All of the above

Question 2

A tax loophole is

Accepted Answer

A)   an illegal method by which individuals or corporations avoid paying the taxes they legally owe.
B)   a provision in the tax code that allows individuals or corporations to reduce their tax burdens legally by meeting certain conditions.
C)   a tax surcharge on incomes within certain ranges.
D)   a provision in the tax code that allows individuals or corporations to shift the economic incidence of a particular tax on to someone else.E) B) and C)
F) None of the above

Question 3

Tax loopholes

Accepted Answer

A)   reduce the progressivity of the federal income tax.
B)   encourage particular patterns of behavior.
C)   include exemption of interest earned on municipal bonds.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 4

The main difference between direct and indirect taxes is that

Accepted Answer

A)   indirect taxes are automatically deducted from workers' paychecks and direct taxes are not.
B)   direct taxes are paid to state and local governments and indirect taxes are paid to the federal government.
C)   direct taxes are taxes levied on people and indirect taxes are taxes levied on activities undertaken by people.
D)   direct taxes are usually proportional and indirect taxes are usually progressive.E) B) and C)
F) B) and D)

Question 5

Excise taxes are a form of sales tax.

Accepted Answer

A) True 
 B)False

Question 6

The Social Security system in the United States today is

Accepted Answer

A)   actuarially sound.
B)   composed of a private pension fund into which workers have paid and who will withdraw their invested funds upon retirement.
C)   currently in no danger of running out of money in the long run.
D)   no longer a "pay as you go" system.E) All of the above
F) C) and D)

Question 7

Homeowners

Accepted Answer

A)   are subject to double taxation.
B)   benefit from several loopholes.
C)   have no particular advantages in the tax system.
D)   must pay tax on the "income" of living in a house.E) All of the above
F) C) and D)

Question 8

When the average tax rate rises as income rises, this is known as progressive taxation.

Accepted Answer

A) True 
 B)False

Question 9

A congress member concerned about ensuring vertical equity in taxation would be most likely to argue for obtaining government revenue through a

Accepted Answer

A)   progressive tax on personal income.
B)   regressive tax on corporate income.
C)   sales tax.
D)   head tax.E) C) and D)
F) A) and B)

Question 10

Federal personal income tax rates were

Accepted Answer

A)   generally increased in the early 1990s and lowered in the 2000s.
B)   generally increased in the 1980s and lowered in the early 1990s.
C)   generally decreased in the 1990s and held constant in the 2000s.
D)   held constant through the 1990s and 2000s.E) A) and B)
F) None of the above

Question 11

Officially, the payroll tax is referred to as

Accepted Answer

A)   the trust fund tax.
B)   Social Security tax.
C)   contributions for social insurance.
D)   investment in Social Security.E) B) and C)
F) A) and D)

Question 12

A factor that would reduce the ability of the Social Security system to maintain current benefit levels with constant tax rates is

Accepted Answer

A)   rapid real wage growth.
B)   reduced population growth.
C)   adoption of a "pay as you go" system.
D)   a slowdown in inflation.E) A) and B)
F) None of the above

Question 13

Which of the following taxes is least likely to be shifted?

Accepted Answer

A)   a federal excise tax on grapefruit
B)   a sales tax on some foodstuffs
C)   a personal income tax
D)   a state tax on football ticketsE) All of the above
F) A) and B)

Question 14

When demand for a product is very inelastic, the burden of a tax falls mainly on

Accepted Answer

A)   producers.
B)   consumers.
C)   tax collectors.
D)   people who drop out of the market.E) A) and B)
F) None of the above

Question 15

Horizontal equity is the concept that

Accepted Answer

A)   equally situated individuals should be taxed equally.
B)   persons with the same income should be taxed equally.
C)   equal property value should be taxed equally.
D)   persons living in the same neighborhood should be taxed equally.E) None of the above
F) All of the above

Question 16

The incidence of a payroll tax is borne by both employers and employees.

Accepted Answer

A) True 
 B)False

Question 17

"Those most able should pay the highest taxes" reflects the

Accepted Answer

A)   ability-to-pay principle.
B)   concept of horizontal equity.
C)   idea of fiscal federalism.
D)   benefits principle.E) C) and D)
F) B) and D)

Question 18

State and local governments typically spend most of their budgets on providing

Accepted Answer

A)   education.
B)   public goods.
C)   public welfare programs.
D)   police protection and administrative services.E) B) and C)
F) C) and D)

Question 19

Faced with a shortage of funds to pay claims, the workman's compensation systems in many states have been forced to raise the workman's compensation tax rate substantially.The tax is paid by employers.Employers have complained that they cannot afford the tax and threaten to go out of business.Assuming the supply of labor is very inelastic, one can argue that ultimately the burden of this tax actually will rest

Accepted Answer

A)   mostly on workers.
B)   mostly on employers.
C)   about 50/50 on workers and employers, like the Social Security tax.
D)   all on employers by statute.E) A) and B)
F) None of the above

Question 20

If a tax is progressive, the average tax rate

Accepted Answer

A)   remains the same as income rises.
B)   rises as income rises.
C)   falls as income rises.
D)   falls with passage of time.E) A) and D)
F) A) and C)

Exam 18: Taxation and Resource Allocation

The main difference between direct and indirect taxes is that

Correct Answer
verified

A factor that would reduce the ability of the Social Security system to maintain current benefit levels with constant tax rates is

Correct Answer
verified

The payroll tax is a

Correct Answer
verified

A tax loophole is

Correct Answer
verified

Horizontal equity is the concept that

Correct Answer
verified

When the average tax rate rises as income rises, this is known as progressive taxation.

Correct Answer
verified

When demand for a product is very inelastic, the burden of a tax falls mainly on

Correct Answer
verified

Excise taxes are a form of sales tax.

Correct Answer
verified

The incidence of a payroll tax is borne by both employers and employees.

Correct Answer
verified

Correct Answer
verified

Homeowners

Correct Answer
verified

"Those most able should pay the highest taxes" reflects the

Correct Answer
verified

If a tax is progressive, the average tax rate

Correct Answer
verified

State and local governments typically spend most of their budgets on providing

Correct Answer
verified

Tax loopholes

Correct Answer
verified

Officially, the payroll tax is referred to as

Correct Answer
verified

The Social Security system in the United States today is

Correct Answer
verified

Federal personal income tax rates were

Correct Answer
verified

A congress member concerned about ensuring vertical equity in taxation would be most likely to argue for obtaining government revenue through a

Correct Answer
verified

Which of the following taxes is least likely to be shifted?

Correct Answer
verified

Exam 18: Taxation and Resource Allocation

The main difference between direct and indirect taxes is that

Correct AnswerverifiedShow Answer

A factor that would reduce the ability of the Social Security system to maintain current benefit levels with constant tax rates is

Correct AnswerverifiedShow Answer

The payroll tax is a

Correct AnswerverifiedShow Answer

A tax loophole is

Correct AnswerverifiedShow Answer

Horizontal equity is the concept that

Correct AnswerverifiedShow Answer

When the average tax rate rises as income rises, this is known as progressive taxation.

Correct AnswerverifiedShow Answer

When demand for a product is very inelastic, the burden of a tax falls mainly on

Correct AnswerverifiedShow Answer

Excise taxes are a form of sales tax.

Correct AnswerverifiedShow Answer

The incidence of a payroll tax is borne by both employers and employees.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Homeowners

Correct AnswerverifiedShow Answer

"Those most able should pay the highest taxes" reflects the

Correct AnswerverifiedShow Answer

If a tax is progressive, the average tax rate

Correct AnswerverifiedShow Answer

State and local governments typically spend most of their budgets on providing

Correct AnswerverifiedShow Answer

Tax loopholes

Correct AnswerverifiedShow Answer

Officially, the payroll tax is referred to as

Correct AnswerverifiedShow Answer

The Social Security system in the United States today is

Correct AnswerverifiedShow Answer

Federal personal income tax rates were

Correct AnswerverifiedShow Answer

A congress member concerned about ensuring vertical equity in taxation would be most likely to argue for obtaining government revenue through a

Correct AnswerverifiedShow Answer

Which of the following taxes is least likely to be shifted?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified