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Exam 12: The Design of the Tax System

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Question 51

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A recent increase in federal gasoline taxes was estimated to cause a $150 million reduction in the total surplus (consumer plus producer surplus)in the gasoline market.If tax revenues increased by $100 million,what is the deadweight loss associated with the tax? As a result of the tax,10,000 people sold their cars and started riding their bicycles to work.How much of the burden of the deadweight loss is incurred by the bicycle riders?

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The direct deadweight loss is $50 millio...

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Question 52

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Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.By how much is his income tax bill lowered due to the change in the tax rates between 2002 and 2003?

A) $500
B) $594
C) $691.50
D) $697.50

E) All of the above
F) A) and C)

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Question 53

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Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What is his average tax rate in 2003?

The principle that people should pay taxes based on the benefits they receive from government services is called the

A tax that is higher for men than for women violates the criterion of

One reason that deadweight losses are so difficult to avoid is that

As tax laws become more complex,

Which tax system requires higher-income taxpayers to have lower tax rates,even though they pay a larger amount of tax when compared to lower-income taxpayers?

An advantage of a consumption tax over the present tax system is that a consumption tax

In choosing the form of a tax,there is often a tradeoff between

Kyle places a $10 value on a glass of red wine,and Keith places an $8 value on it.If there is no tax on glasses of red wine,the price of a glass of red wine reflects the cost of making it.The equilibrium price for a glass of red wine is $6.Suppose the government levies a tax of $3 on each glass of red wine,and the equilibrium price of a glass of red wine increases to $9.What is total consumer surplus after the tax is levied?

Because of Iceland's tax holiday in 1987,

The argument that each person should pay taxes according to how well the individual can shoulder the burden is called

A tax on all forms of income will

Table 12-2 United States Income Tax Rates for a Single Individual, 2002 and 2003. -Refer to Table 12-2.Costa is a single person whose taxable income is $50,000 a year.What is his marginal tax rate in 2003?

All of the following are transfer payments except

In the United States,the marginal tax rate on the personal federal income tax

European countries tend to rely on which type of tax more so than the United States does?

Table 12-8 -Refer to Table 12-8.If the government imposes a $2,000 lump-sum tax,the average tax rate for Marcia and Charles would be

When government receipts exceed total government spending during a fiscal year,the difference is