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177. Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her average tax rate is
a.
18.5%.
b.
20.2%.
c.
21.8%.
d.
25.0%.
178. Refer to Table 12-10. If Miss Kay has $80,000 in taxable income, her marginal tax rate is
a.
15%.
b.
25%.
c.
28%.
d.
33%.
179. Refer to Table 12-10. If Willie has $170,000 in taxable income, his tax liability will be
a.
$16,781.
b.
$41,309.
c.
$41,827.
d.
$47,600.
180. Refer to Table 12-10. If Willie has $170,000 in taxable income, his average tax rate is
a.
23.8%.
b.
24.3%.
c.
25.9%.
d.
28.0%.
181. Refer to Table 12-10. If Willie has $170,000 in taxable income, his marginal tax rate is
a.
25%.
b.
28%.
c.
33%.
d.
35%.
182. Refer to Table 12-10. If Si has $100,000 in taxable income, his tax liability will be
a.
$838.
b.
$3,844.
c.
$12,100.
d.
$21,709.
183. Refer to Table 12-10. If Si has $100,000 in taxable income, his average tax rate is
a.
13.7%.
b.
15.2%.
c.
21.7%.
d.
28.3%.
184. Refer to Table 12-10. If Si has $100,000 in taxable income, his marginal tax rate is
a.
25%.
b.
28%.
c.
33%.
d.
35%.
185. Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be
a.
$4,531.
b.
$4,678.
c.
$4,950.
d.
$8,269.
186. Refer to Table 12-10. If Jace has $33,000 in taxable income, his average tax rate is
a.
13.7%.
b.
14.6%.
c.
15.0%.
d.
15.2%.
187. Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is
a.
10%.
b.
15%.
c.
25%.
d.
28%.
Table 12-11
The Tax Rate is ...
On Taxable Income...
8%
From $0 up to $15,000
16
From $15,000 up to $35,000
24
From $35,000 up to $75,000
34
From $75,000 up to $145,000
36
From $145,000 up to $330,000
38
over $330,000
188. Refer to Table 12-11. If Al has taxable income of $165,000, his tax liability is
a.
$23,800.
b.
$36,000.
c.
$45,000.
d.
$47,698.
189. Refer to Table 12-11. If Al has taxable income of $165,000, his average tax rate is
a.
26.6%.
b.
26.9%.
c.
27.3%.
d.
28.5%.
190. Refer to Table 12-11. If Al has taxable income of $165,000, his marginal tax rate is
a.
16%.
b.
24%.
c.
34%.
d.
36%.
191. Refer to Table 12-11. If Peggy has taxable income of $43,000, her tax liability is
a.
$1,920.
b.
$4,400.
c.
$6,320.
d.
$8,175.
192. Refer to Table 12-11. If Peggy has taxable income of $43,000, her average tax rate is
a.
14.7%.
b.
16.3%.
c.
20.8%.
d.
24.0%.
193. Refer to Table 12-11. If Peggy has taxable income of $43,000, her marginal tax rate is
a.
8%.
b.
16%.
c.
24%.
d.
34%.
194. Refer to Table 12-11. If Bud has taxable income of $78,000, his tax liability is
a.
$7,800.
b.
$9,900.
c.
$10,200.
d.
$15,020.
195. Refer to Table 12-11. If Bud has taxable income of $78,000, his average tax rate is
a.
18.7%.
b.
19.3%.
c.
20.1%.
d.
34.0%.
196. Refer to Table 12-11. If Bud has taxable income of $78,000, his marginal tax rate is
a.
19.3%.
b.
24.0%.
c.
26.8%.
d.
34.0%.
197. Under a regressive tax system, the marginal tax rate for high income taxpayers is
a.
higher than the marginal tax rate for low income taxpayers.
b.
the same as the marginal tax rate for low income taxpayers.
c.
lower than the marginal tax rate for low income taxpayers.
d.
Any of the above could be true under a regressive tax system.
198. If the government imposes a tax of $3,000 on everyone, the tax would be a(n)
a.
income tax.
b.
consumption tax.
c.
lump-sum tax.
d.
marginal tax.
199. Under a progressive tax system, the marginal tax rate could be equal to the average tax rate only when a taxpayer
a.
has a very high income.
b.
has a very low income.
c.
is self-employed.
d.
invests in a retirement plan.
200. The most efficient tax possible is a
a.
marginal income tax.
b.
lump-sum tax.
c.
consumption tax.
d.
corporate profit tax.
201. A lump-sum tax
a.
is most frequently used to tax real property.
b.
does not distort incentives.
c.
distorts incentives more than any other type of tax.
d.
is the most fair tax.
202. The marginal tax rate for a lump-sum tax
a.
is always positive.
b.
is always negative.
c.
is zero.
d.
can take on any value but must be greater than the average tax rate.
203. Which of the following in not a reason that a lump-sum tax imposes a minimal administrative burden on taxpayers?
a.
Everyone can easily compute the amount of tax owed.
b.
There is no benefit to hiring an accountant to do your taxes.
c.
Everyone owes the same amount of tax, regardless of earnings.
d.
The government can easily forecast tax revenues.
204. If the government were to impose a tax that assigned everyone the same tax liability, it would be
a.
a lump-sum tax.
b.
an equitable tax.
c.
supported by the poor.
d.
a progressive tax.
205. One advantage of a lump-sum tax over other taxes is that it
a.
is both equitable and efficient.
b.
doesn't cause deadweight loss.
c.
would place a larger tax burden on the rich.
d.
would raise more revenues.
206. Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?
a.
It would not cause deadweight loss.
b.
It imposes a minimal administrative burden on taxpayers.
c.
It is more equitable.
d.
It is more efficient.
207. Lump-sum taxes are rarely used in the real world because
a.
while lump-sum taxes have low administrative burdens, they have high deadweight losses.
b.
while lump-sum taxes have low deadweight losses, they have high administrative burdens.
c.
lump-sum taxes are often viewed as unfair because they take the same amount of money from both poor and
rich.
d.
lump-sum taxes are very inefficient.
208. With a lump-sum tax,the average tax rate for high income taxpayers will be
a.
the same as the average tax rate for low income taxpayers.
b.
lower than the average tax rate for low income taxpayers.
c.
higher than the average tax rate for high income taxpayers.
d.
Any of the above could be true under a regressive tax system.
209. With a lump-sum tax, the
a.
marginal tax rate is always less than the average tax rate.
b.
average tax rate is always less than the marginal tax rate.
c.
marginal tax rate falls as income rises.
d.
marginal tax rate rises as income rises.
210. Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the marginal
income tax rate for an individual who earns $40,000 during the year?
a.
0%
b.
10%
c.
More than 10%
d.
The marginal tax rate cannot be determined without knowing the entire tax schedule.
211. Suppose a country imposes a lump-sum income tax of $5,000 on each individual in the country. What is the average
income tax rate for an individual who earns $40,000 during the year?
a.
0%
b.
10%
c.
More than 10%
d.
The average tax rate cannot be determined without knowing the entire tax schedule.
212. Suppose a country imposes a lump-sum income tax of $6,000 on each individual in the country. What is the average
income tax rate for an individual who earns $60,000 during the year?
a.
0%
b.
10%
c.
More than 10%
d.
The average tax rate cannot be determined without knowing the entire tax schedule.
213. If a government simplified its tax system the likeliest result would be a decrease in
a.
consumer surplus.
b.
producer surplus.
c.
in deadweight loss.
d.
tax revenues.
Table 12-12
Taxpayer
Income
Marcia
$40,000
Charles
$30,000
214. Refer to Table 12-12. If the government imposes a $2,000 lump-sum tax, the average tax rate for Marcia and
Charles would be
a.
5 percent and 6.7 percent, respectively.
b.
8 percent and 6 percent, respectively.
c.
12 percent and 9 percent, respectively.
d.
13 percent and 10 percent, respectively.
215. Refer to Table 12-12. If the government imposes a $3,000 lump-sum tax, the marginal tax rate for Charles would be
a.
0 percent.
b.
5 percent.
c.
6.7 percent.
d.
10 percent.
216. Assume a small town decides to build a park by imposing a $2,000 lump-sum tax on each household. If a
household’s income rises from $50,000 to $75,000, its marginal tax rate is:
a.
0%
b.
2.67%
c.
4%
d.
8%
217. The federal government decides to impose a 15% excise tax on luxury yachts. An economist would suggest that:
a.
this is an effective way to indirectly tax the wealthy
b.
the tax incidence will fall largely on those who buy luxury yachts
c.
if prospective buyers decide to purchase other luxury goods instead, the tax incidence will largely fall on those
who build and sell luxury yachts
d.
the price of luxury yachts will rise by 15%
218. Suppose a state has the following individual income tax structure. The first $20,000 that an individual earns is taxed
at 5%. The next $30,000 is taxed at 10%. Any income exceeding $50,000 is taxed at 20%. Based on this tax structure,
if a person’s income rises from $45,000 to $55,000, his marginal tax rate is:
a.
25%
b.
20%
c.
10%
d.
15%
219. Suppose a state has the following individual income tax structure.The first $20,000 that an individual earns is taxed
at 5%. The next $30,000 is taxed at 10%. Any income exceeding $50,000 is taxed at 20%.Based on this tax structure, if a
person’s income is equal to $60,000, his average tax rate is equal to:
a.
15%
b.
10%
c.
11.67%
d.
20%
