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215. With a proportional tax, higher-income persons will pay
A. the same amount of taxes as lower-income persons.
216. A tax is regressive if it
A. takes a higher percentage of income as income increases.
217. A regressive tax means that if someone earning $25,000 pays $5,000, someone earning
$50,000 must pay
A. less than $5,000.
20-102
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Difficulty:
02 Medium
Learning Objective: 20-06 Summarize the different philosophies regarding the distribution of a
nations tax burden.
Test Bank: II
Topic:
Apportioning the Tax Burden
218. A person whose income has increased from $10,000 to $20,000 finds that her federal
marginal tax rate has increased from 18 percent to 22 percent. This is an example of a
A. regressive tax.
219. Which of the following taxes is most likely to be regressive?
A. personal income taxes
220.
Refer to the graph. The relationship between the average tax rate and the tax base in a
proportional tax would be represented by
A. curve A.
20-104
221.
Refer to the graph. A 3-percent general sales tax would have a structure that is illustrated by
D. none of the curves.
222.
Income
Tax A
Tax B
Tax C
Tax D
$10,000
$650
$1,000
$500
$1,000
20,000
850
2,000
1,000
3,000
30,000
950
4,000
1,500
6,000
40,000
1,050
6,000
2,000
9,500
The table shows four tax schedules for the given base of taxable income. Which of the tax
schedules is a progressive tax schedule throughout?
A. A
223.
Income
Tax A
Tax B
Tax C
Tax D
$10,000
$650
$1,000
$500
$1,000
20,000
850
2,000
1,000
3,000
30,000
950
4,000
1,500
6,000
40,000
1,050
6,000
2,000
9,500
The table shows four tax schedules for the given base of taxable income. Which of the tax
schedules is a proportional tax schedule throughout?
A. A
20-106
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
nations tax burden.
Test Bank: II
Topic:
Apportioning the Tax Burden
224.
Income
Tax A
Tax B
Tax C
Tax D
$10,000
$650
$1,000
$500
$1,000
20,000
850
2,000
1,000
3,000
30,000
950
4,000
1,500
6,000
40,000
1,050
6,000
2,000
9,500
The table shows four tax schedules for the given base of taxable income. Which of the tax
schedules is a regressive tax schedule throughout?
D. none of the schedules
225.
Income
Taxes
$20,000
$3,400
16,000
3,000
12,000
2,400
8,000
1,600
4,000
800
The table describes the relationship between income and a tax. The tax may be best described
as
A. regressive at lower income levels and progressive at higher income levels.
226. Most economists believe that property taxes
A. should be eliminated.
227. The federal personal income tax
A. has a regressive structure.
20-108
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
nations tax burden.
Test Bank: II
Topic:
Apportioning the Tax Burden
228. The Social Security tax is regressive because
A. the Social Security tax rate applied does not rise with the salary level.
229. The fact that high-income earners tend to earn a higher percentage of their incomes from
rent and dividends, in contrast to low-income earners, makes the payroll taxes
A. more progressive.
230. Tax incidence may be defined as the
A. average tax rate of a given group of taxpayers.
20-109
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 20-07 Explain the principles relating to tax shifting, tax incidence, and the
efficiency losses caused by taxes.
Test Bank: II
Topic:
Tax Incidence and Efficiency Loss
231. Tax shifting refers to the fact that
D. a nation can sometimes shift from a progressive tax structure to one that is regressive.
232. The incidence of taxation refers to
D. whether or not the benefits-received principle applies.
233. If the tax on gasoline is increased, gas stations are most likely to pass most of this increase
to the consumer if the demand is
A. unitary elastic.
234. Other things being equal, the burden of a sales tax on a product will be borne entirely by
the producer if
C. supply and demand have the same price elasticity.
D. demand is perfectly inelastic.
235. The burden of a specific sales tax falls entirely on the consumer when the
A. elasticity of supply is zero.
20-111
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Test Bank: II
Topic:
Tax Incidence and Efficiency Loss
236. The supply curve for a product has infinite elasticity. An excise tax is levied on the
product. The likely effect will be to
A. reduce the amount the producer receives for each unit sold by the amount of the tax.
237. Suppose that a $0.75 tax is placed on gasoline. Under what circumstances will gasoline
sellers end up shouldering the full burden of the tax?
A. if supply is perfectly inelastic and demand is downward-sloping
238. In general, the buyers will tend to pay a bigger share of a tax on a good when
A. the price elasticities of supply and demand are low.
20-112
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
Difficulty:
02 Medium
Learning Objective: 20-07 Explain the principles relating to tax shifting, tax incidence, and the
efficiency losses caused by taxes.
Test Bank: II
Topic:
Tax Incidence and Efficiency Loss
239. The supply of meat is more elastic in the long run than in the short run. Ceteris paribus, as
time goes by, the burden of a tax on cattle will increasingly be shouldered by the
A. grocer.
240. Which generalization is incorrect?
A. Given supply, the more elastic the demand for a product, the larger is the portion of an excise
tax that is shifted forward to consumers.
tax that is shifted forward to consumers.
20-113
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
Topic:
Tax Incidence and Efficiency Loss
241.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. What is the amount of the tax per unit of product?
A. $3
20-114
242.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. What was the price of the product before the tax was imposed, and what is the
price with the tax?
A. $8 and $5, respectively
243.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. How much of the excise tax per unit is shouldered by the buyers?
C. $6
D. $8
244.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. The excise tax on this product as shown in the graph is ultimately paid
A. 100 percent by consumers
245.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. What is the area that represents the portion of the excise tax that is the burden to
consumers?
D. WXYZU
246.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. What is the area that represents the total amount of tax revenue going to the
government?
A. WXTV
247.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. How much is the total amount of tax revenue going to the government?
A. $77
248.
The graph illustrates the market for a product on which an excise tax has been imposed by
government. What is the area that represents the efficiency loss due to the tax?
A. XYT
