978-1259723223 Test Bank TBChap020 Part 6

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.

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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.

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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

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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.

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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.

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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.

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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

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.

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Topic:

Tax Incidence and Efficiency Loss

241.