Question : 8.3   Fairness and the Big Tradeoff 1) Consider the two principles : 1241621

8.3   Fairness and the Big Tradeoff

1) Consider the two principles of fair taxation, the benefits principle and the ability-to-pay principle.

A) Both state that people should pay taxes according to the benefits they receive from public services.

B) Both state that people should pay taxes according to how easily they can bear the burden.

C) Both are based on horizontal equity.

D) Both present conflicting ideas on the fairness of taxes.

E) Both are based on vertical equity.

2) The benefits principle of fair taxation means that people

A) pay taxes according to the level of benefits they receive.

B) pay taxes according to their ability to pay.

C) with the same ability pay the same taxes.

D) with a greater ability to pay, pay more taxes.

E) Answers B, C, and D are correct.

3) The proposition that people should pay taxes equal to the benefits they receive from public services is known as the

A) ability-to-pay principle.

B) progressive tax principle.

C) fairness principle.

D) benefits principle.

E) “he or she who gets, pays” principle.

4) The benefits principle of fair taxation

A) can be used to justify the progressive income tax.

B) can be used to justify high fuel taxes to pay for public schools.

C) is the proposition that people should pay taxes equal to the benefits they receive.

D) Both answers A and B are correct.

E) Both answers B and C are correct.

5) The benefits principle of tax fairness argues that

A) everyone receives equal benefits from public services so taxes should be the same for all.

B) highly paid people should pay lower taxes because they work harder.

C) taxes should be related to the amount of income earned.

D) people should pay taxes equal to the benefits from public services received.

E) the benefits people get from the government should not be related to their taxes.

6) The benefits principle of fairness of taxes is the proposition that

A) taxes should only be used to correct market failures.

B) people should pay taxes according to how easily they can bear the burden.

C) tax systems can only be fair if all people agree on them.

D) people should pay taxes equal to their benefit from public services.

E) the incidence of taxes should be equal across households.

7) Which of the following is an example of a tax following the benefits principle?

i.sales taxes on gasoline used to fund road maintenance projects

ii.federal income tax used to fund food stamps for poorer households

iii.property taxes used to finance public education

A) i only

B) ii only

C) iii only

D) ii and iii

E) i, ii, and iii

8) The argument that those who use the highways the most should pay most of the cost of providing them, is an example of

A) the benefits principle of fair taxes.

B) the ability-to-pay principle of fair taxes.

C) a progressive tax system.

D) a proportional tax system.

E) the “fairest incidence of tax benefits” principle.

9) Which of the following taxes best illustrate the benefits principle of tax fairness?

A) Roads and highways are built and maintained through a tax on gasoline.

B) The local library is funded through property taxes levied on all homeowners.

C) The WIC program provides food to low income mothers and is funded through the federal income tax.

D) A sales tax on food pays for local police and fire protection.

E) City parks are maintained through local excise taxes.

10) Which of the following taxes best illustrate the benefits principle of tax fairness?

A) A property tax that is proportional to the value of a home is used to fund K-12 education.

B) The local library is funded through property taxes levied on all homeowners.

C) The WIC program provides food to low income mothers and is funded through the federal income tax.

D) A sales tax on food pays for local police and fire protection.

E) The local youth sports leagues are financed by fees collected from participants by the city.