Question : 54) When considering changes in tax policy, economists usually focus : 1388022

 

54) When considering changes in tax policy, economists usually focus on

A) the average tax rate.

B) the marginal tax rate.

C) people’s willingness to pay taxes.

D) people’s ability to pay taxes.

 

 

55) The marginal tax rate is

A) the amount of taxes paid as a percentage of income.

B) the amount of per-capita taxes paid.

C) the amount of taxes paid as a percentage of gross domestic product (GDP).

D) the fraction of each additional dollar of income that must be paid in taxes.

 

 

56) An income tax system is ________ if marginal tax rates increase as income increases.

A) progressive

B) regressive

C) efficient

D) equitable

 

Table 18-9

 

Income Tax Bracket

Marginal Tax Rate

$0 – 6,000

10%

6,001 – 20,000

15%

20,001 – 44,500

22%

44,501 and over

30%

 

Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia.

 

57) Refer to Table 18-9.  Calculate the income tax paid by Sylvia, a single taxpayer with an income of $70,000.

A) $21,000

B) $15,740

C) $15,400

D) $13,475

 

 

58) Refer to Table 18-9.  Sylvia is a single taxpayer with an income of $70,000. What is her marginal tax rate and what is her average tax rate?

A) marginal tax rate = 30%; average tax rate = 30%

B) marginal tax rate = 8%; average tax rate = 19.3%

C) marginal tax rate = 30%; average tax rate = 22.5%

D) marginal tax rate = 20%; average tax rate = 30%

 

 

59) A tax is efficient if

A) individuals with the lowest incomes pay proportionately lower taxes than individuals with the highest incomes.

B) it is based on profits earned and not on wages.

C) it encourages saving and investment.

D) it imposes a small excess burden relative to the revenue it raises.

 

60) The excess burden of a tax

A) measures the efficiency loss to the economy that results from a tax, causing a reduction in the quantity of goods and services produced.

B) is measured by the administrative costs required to implement a tax system.

C) is a measure of the hardship imposed on low-income individuals in a society.

D) is a measure of the foregone consumption as a result of having to pay taxes.

 

 

61) According to the ability-to-pay principle of taxation,

A) individuals who receive the benefit of a good or service should bear a greater share of the tax burden.

B) it is fair to expect a greater share of the tax burden to be borne by people who have a greater ability to pay.

C) people in the same economic situation should bear an equal share of the tax burden.

D) individuals who are willing to bear a greater share of the tax burden should be compensated with non-monetary benefits.

 

 

62) U.S. taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns. This administrative cost

A) is part of the deadweight loss of taxation.

B) is equal to the value of consumer surplus associated with the income tax system.

C) can be claimed as a deduction on income tax returns.

D) is larger for individuals in the lowest income quintile than for individuals in the highest income quintile.

 

63) According to the horizontal-equity principle of taxation,

A) individuals who receive the benefits of a good or service should bear a greater share of the tax burden.

B) individuals who are most able to pay should bear a greater share of the tax burden.

C) people in the same economic situation should be treated equally.

D) individuals who are willing to bear a greater share of the tax burden should be compensated with non-monetary benefits.