Question 1

Refer to the information provided in Figure 19.1 below to answer the questions that follow.  Figure 19.1
-Refer to Figure 19.1. The workersʹ share of the tax burden is ________ and the employersʹ share of the tax burden is ________.

Accepted Answer

A)   $2,100; $1,400
B)   $1,400; $2,100
C)   $700; $1,400
D)   $0; $2,100E) A) and B)
F) A) and C)

Question 2

The U.S. individual income tax is designed to be ________.

Accepted Answer

A)   progressive
B)   regressive
C)   proportional
D)   an ability-to-pay taxE) B) and D)
F) A) and B)

Question 3

Refer to Scenario 19.1 below to answer the questions that follow.
SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%.
-Refer to Scenario 19.1. When this person earns $70,000, her tax payment would be

Accepted Answer

A)   $2,500.
B)   $14,500.
C)   $17,500.
D)   indeterminate from this information.E) B) and D)
F) B) and C)

Question 4

A comprehensive tax of 15% on all forms of income with no deductions or exclusions is an example of a

Accepted Answer

A)   proportional tax.
B)   progressive tax.
C)   regressive tax.
D)   rate tax.E) C) and D)
F) All of the above

Question 5

Arnold Harberger's study on the incidence of the corporate income tax concluded that the burden of the tax is borne

Accepted Answer

A)   by corporations in the form of lower profits and by consumers in the form of higher prices.
B)   by consumers in the form of higher prices and by workers in the form of lower wages.
C)   only by noncorporate firms in the form of higher capital prices.
D)   by owners of corporations, proprietorships, and partnerships in rough proportion to profits.E) A) and B)
F) All of the above

Question 6

A tax whose burden, expressed as a percentage of income, falls as income increases is a

Accepted Answer

A)   regressive tax.
B)   progressive tax.
C)   proportional tax.
D)   benefits-received tax.E) B) and C)
F) B) and D)

Question 7

Neutral taxes do not impose excess burdens.

Accepted Answer

A) True 
 B)False

Question 8

As a result of an increase in the payroll tax that employers must pay on their employeesʹ wages, employers reduce the starting wage for new employees. This is an example of

Accepted Answer

A)   tax shifting.
B)   tax incidence.
C)   a regressive tax.
D)   tax avoidance.E) A) and B)
F) C) and D)

Question 9

Since the demand for gasoline is relatively inelastic, a gas tax is largely borne by consumers.

Accepted Answer

A) True 
 B)False

Question 10

The ________ tax rate is the tax rate paid on any additional income earned.

Accepted Answer

A)   average
B)   total
C)   marginal
D)   proportionalE) A) and B)
F) A) and D)

Question 11

Refer to the information provided in Figure 19.1 below to answer the questions that follow.  Figure 19.1
-Refer to Figure 19.1. After firms can respond to the payroll tax, the workers will take home a per-hour wage of

Accepted Answer

A)   $12.
B)   $10.
C)   $7.
D)   $5.E) A) and B)
F) A) and C)

Question 12

What circumstances favor nonneutral taxes?

Accepted Answer

A)   only the presence of externalities
B)   only the presence of other distortionary taxes
C)   both the presences of externalities and other distorting taxes
D)   both inelastic demand and the presence of externalitiesE) B) and D)
F) C) and D)

Question 13

Refer to the information provided in Table 19.1 below to answer the questions that follow.
Table 19.1
   Total Income  Total Taxes $10,000$1,00020,0002,40030,0004,50040,0008,000\begin{array} { | c | c | } \hline 	ext { Total Income } & 	ext { Total Taxes } \\hline \$ 10,000 & \$ 1,000 \\hline 20,000 & 2,400 \\hline 30,000 & 4,500 \\hline 40,000 & 8,000 \\hline\end{array} Total Income $10,00020,00030,00040,000​ Total Taxes $1,0002,4004,5008,000​​ 
-Relating to the Economics in Practice on page 392: Refer to Table 19.1. At an income level of $10,000, the average tax rate is

Accepted Answer

A)   1%.
B)   5%.
C)   10%.
D)   20%. E) A) and D)
F) All of the above

Question 14

Payroll taxes are ultimately borne entirely by workers.

Accepted Answer

A) True 
 B)False

Question 15

If demand were perfectly elastic, there would be no excess burden.

Accepted Answer

A) True 
 B)False

Question 16

The benefits-received principle of taxation is not often used because

Accepted Answer

A)   if tax payments are linked to the benefits received, taxpayers tend to overstate the benefits that they receive from public goods.
B)   it leads to an overproduction of public goods.
C)   it is difficult to determine the values individual taxpayers place on goods and services that are produced using tax revenue.
D)   it leads to less equality in the after-tax distribution of income.E) All of the above
F) A) and C)

Question 17

If labor supply is very elastic, the payroll tax is

Accepted Answer

A)   borne mostly by the employer.
B)   borne entirely by the employer.
C)   borne mostly by the workers.
D)   split evenly between the employer and the workers.E) B) and C)
F) B) and D)

Question 18

A tax whose burden is the same proportion of income for all households is

Accepted Answer

A)   a regressive tax.
B)   a progressive tax.
C)   a proportional tax.
D)   an equal tax.E) B) and C)
F) All of the above

Question 19

Refer to the information provided in Table 19.5 below to answer the questions that follow.
Capital and labor each cost $1 per unit. The firm produces 1,000 units of output.
Table 19.5
   Input  Requirements  per unit of  Output  Technology KL A 52 B 35\begin{array} { | c | c c | } & \begin{array} { c } 	ext { Input } \	ext { Requirements } \	ext { per unit of } \	ext { Output }\end{array} \	ext { Technology } & K& L \\hline 	ext { A } & 5 & 2 \\hline 	ext { B } & 3 & 5 \\hline\end{array} Technology  A  B ​ Input  Requirements  per unit of  Output ​K53​L25​​ 
-Refer to Table 19.5. Suppose the government imposes a 100% tax on capital. What is the total tax revenue raised?

Accepted Answer

A)   $2,000
B)   $3,000
C)   $5,000
D)   The answer is impossible to determine with the given information. E) B) and D)
F) B) and C)

Question 20

Refer to Scenario 19.1 below to answer the questions that follow.
SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%.
-Refer to Scenario 19.1. When this person earns $60,000, her average tax rate is

Accepted Answer

A)   5%.
B)   20%.
C)   25%.
D)   indeterminate from this information.E) A) and C)
F) A) and B)

Exam 19: Public Finance: The Economics of Taxation

Arnold Harberger's study on the incidence of the corporate income tax concluded that the burden of the tax is borne

Correct Answer
verified

The U.S. individual income tax is designed to be ________.

Correct Answer
verified

Refer to Scenario 19.1 below to answer the questions that follow. SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%. -Refer to Scenario 19.1. When this person earns $60,000, her average tax rate is

Correct Answer
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Refer to Scenario 19.1 below to answer the questions that follow. SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%. -Refer to Scenario 19.1. When this person earns $70,000, her tax payment would be

Correct Answer
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If demand were perfectly elastic, there would be no excess burden.

Correct Answer
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A tax whose burden, expressed as a percentage of income, falls as income increases is a

Correct Answer
verified

As a result of an increase in the payroll tax that employers must pay on their employeesʹ wages, employers reduce the starting wage for new employees. This is an example of

Correct Answer
verified

Payroll taxes are ultimately borne entirely by workers.

Correct Answer
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Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1. The workersʹ share of the tax burden is and the employersʹ share of the tax burden is .

Correct Answer
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Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1. After firms can respond to the payroll tax, the workers will take home a per-hour wage of

Correct Answer
verified

Correct Answer
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A tax whose burden is the same proportion of income for all households is

Correct Answer
verified

If labor supply is very elastic, the payroll tax is

Correct Answer
verified

A comprehensive tax of 15% on all forms of income with no deductions or exclusions is an example of a

Correct Answer
verified

What circumstances favor nonneutral taxes?

Correct Answer
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Neutral taxes do not impose excess burdens.

Correct Answer
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The ________ tax rate is the tax rate paid on any additional income earned.

Correct Answer
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Correct Answer
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The benefits-received principle of taxation is not often used because

Correct Answer
verified

Since the demand for gasoline is relatively inelastic, a gas tax is largely borne by consumers.

Correct Answer
verified

Exam 19: Public Finance: The Economics of Taxation

Arnold Harberger's study on the incidence of the corporate income tax concluded that the burden of the tax is borne

Correct AnswerverifiedShow Answer

The U.S. individual income tax is designed to be ________.

Correct AnswerverifiedShow Answer

Refer to Scenario 19.1 below to answer the questions that follow. SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%. -Refer to Scenario 19.1. When this person earns $60,000, her average tax rate is

Correct AnswerverifiedShow Answer

Refer to Scenario 19.1 below to answer the questions that follow. SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%. -Refer to Scenario 19.1. When this person earns $70,000, her tax payment would be

Correct AnswerverifiedShow Answer

If demand were perfectly elastic, there would be no excess burden.

Correct AnswerverifiedShow Answer

A tax whose burden, expressed as a percentage of income, falls as income increases is a

Correct AnswerverifiedShow Answer

As a result of an increase in the payroll tax that employers must pay on their employeesʹ wages, employers reduce the starting wage for new employees. This is an example of

Correct AnswerverifiedShow Answer

Payroll taxes are ultimately borne entirely by workers.

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1. The workersʹ share of the tax burden is ________ and the employersʹ share of the tax burden is ________.

Correct AnswerverifiedShow Answer

Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1. After firms can respond to the payroll tax, the workers will take home a per-hour wage of

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A tax whose burden is the same proportion of income for all households is

Correct AnswerverifiedShow Answer

If labor supply is very elastic, the payroll tax is

Correct AnswerverifiedShow Answer

A comprehensive tax of 15% on all forms of income with no deductions or exclusions is an example of a

Correct AnswerverifiedShow Answer

What circumstances favor nonneutral taxes?

Correct AnswerverifiedShow Answer

Neutral taxes do not impose excess burdens.

Correct AnswerverifiedShow Answer

The ________ tax rate is the tax rate paid on any additional income earned.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The benefits-received principle of taxation is not often used because

Correct AnswerverifiedShow Answer

Since the demand for gasoline is relatively inelastic, a gas tax is largely borne by consumers.

Correct AnswerverifiedShow Answer

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Refer to the information provided in Figure 19.1 below to answer the questions that follow. Figure 19.1 -Refer to Figure 19.1. The workersʹ share of the tax burden is and the employersʹ share of the tax burden is .

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