Question 1

Which of the following statements concerning tax preferences is true?

Accepted Answer

A) The annual revenue loss from federal tax preferences is quantified in the Tax Expenditures Budget. 
B) Tax preferences increase the fairness of the tax law. 
C) Tax preferences simplify the tax law. 
D) Tax preferences make the tax law more neutral across taxpayers. 
A) The annual revenue loss from federal tax preferences is quantified in the Tax Expenditures Budget. 
B) Tax preferences increase the fairness of the tax law. 
C) Tax preferences simplify the tax law. 
D) Tax preferences make the tax law more neutral across taxpayers.

Question 2

According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.

Accepted Answer

A) True 
 B)False

Question 3

Assume that Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?

Accepted Answer

A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax. 
A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax.

Question 4

Which of the following statements about tax rate structures is true?

Accepted Answer

A) Regressive rate structures are illegal in the United States. 
B) A tax with a graduated rate structure must be either regressive or progressive. 
C) A proportionate rate structure is the only structure resulting in vertical equity. 
D) None of the choices are true. 
A) Regressive rate structures are illegal in the United States. 
B) A tax with a graduated rate structure must be either regressive or progressive. 
C) A proportionate rate structure is the only structure resulting in vertical equity. 
D) None of the choices are true.

Question 5

Assume that Congress plans to amend the federal income tax to provide a deduction for the first $2,400 of residential rent paid by families with incomes below the federal poverty level.Which of the following statements is true?

Accepted Answer

A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax. 
A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax.

Question 6

Jurisdiction M imposes an individual income tax based on the following schedule.   Which of the following statements is true?

Accepted Answer

A) The schedule provides no information as to whether Jurisdiction M's tax is horizontally equitable. 
B) Jurisdiction M's tax is vertically equitable. 
C) Jurisdiction M's tax is vertically equitable only for individuals with $50,000 or less taxable income. 
D) Both "The schedule provides no information as to whether Jurisdiction M's tax is horizontally equitable" and "Jurisdiction M's tax is vertically equitable" are true. 
A) The schedule provides no information as to whether Jurisdiction M's tax is horizontally equitable. 
B) Jurisdiction M's tax is vertically equitable. 
C) Jurisdiction M's tax is vertically equitable only for individuals with $50,000 or less taxable income. 
D) Both "The schedule provides no information as to whether Jurisdiction M's tax is horizontally equitable" and "Jurisdiction M's tax is vertically equitable" are true.

Question 7

Vervet County levies a real property tax based on the following schedule.   Which of the following statements is false?

Accepted Answer

A) If Mr.Clem owns real property valued at $112,500,his average tax rate is 3%. 
B) If Ms.Barker owns real property valued at $455,650,her average tax rate is 2.1%. 
C) If Ms.Lumley owns real property valued at $750,000,her marginal tax rate is 1%. 
D) None of the choices are false. 
A) If Mr.Clem owns real property valued at $112,500,his average tax rate is 3%. 
B) If Ms.Barker owns real property valued at $455,650,her average tax rate is 2.1%. 
C) If Ms.Lumley owns real property valued at $750,000,her marginal tax rate is 1%. 
D) None of the choices are false.

Question 8

According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.

Accepted Answer

A) True 
 B)False

Question 9

Jurisdiction M imposes an individual income tax based on the following schedule.   Which of the following statements is true?

Accepted Answer

A) If Mrs.Hall's taxable income is $227,000,her average tax rate is 12%. 
B) If Mr.Poe's taxable income is $41,200,his marginal tax rate is 8%. 
C) If Ms.Kaye's taxable income is $63,800,her marginal tax rate is 8%. 
D) None of the choices are correct. 
A) If Mrs.Hall's taxable income is $227,000,her average tax rate is 12%. 
B) If Mr.Poe's taxable income is $41,200,his marginal tax rate is 8%. 
C) If Ms.Kaye's taxable income is $63,800,her marginal tax rate is 8%. 
D) None of the choices are correct.

Question 10

The country of Valhalla levies an income tax with the following rate structure.
   A.Mrs.Greene's annual income is $125,000.Compute her tax,her average tax rate,and her marginal tax rate.
B.Mr.Chen's annual income is $220,000.Compute his tax,his average tax rate,and his marginal tax rate.
C.Does Valhalla have a proportionate,progressive,or regressive tax rate structure?

Accepted Answer

A.Mrs.Greene's tax is $10,000 = (5% × $5

Question 11

Congress originally enacted the federal estate and gift taxes to improve:

Accepted Answer

A) Distributional justice 
B) Economic efficiency 
C) Vertical equity 
D) Horizontal equity 
A) Distributional justice 
B) Economic efficiency 
C) Vertical equity 
D) Horizontal equity

Question 12

Which of the following statements concerning a regressive tax rate structure is true?

Accepted Answer

A) A regressive tax rate structure is justified by the tax policy of distributive justice. 
B) A regressive rate structure is justified by the theory of the declining marginal utility of income. 
C) Under a regressive rate structure,the average tax rate for high-income taxpayers is less than the marginal tax rate. 
D) None of the statements are true. 
A) A regressive tax rate structure is justified by the tax policy of distributive justice. 
B) A regressive rate structure is justified by the theory of the declining marginal utility of income. 
C) Under a regressive rate structure,the average tax rate for high-income taxpayers is less than the marginal tax rate. 
D) None of the statements are true.

Question 13

Which of the following statements concerning tax preferences is false?

Accepted Answer

A) Tax preferences increase the complexity of the law. 
B) Tax preferences raise additional revenue for the government. 
C) Tax preferences are government subsidies for targeted taxpayer activities. 
D) Tax preferences do not improve the accurate measurement of the tax base. 
A) Tax preferences increase the complexity of the law. 
B) Tax preferences raise additional revenue for the government. 
C) Tax preferences are government subsidies for targeted taxpayer activities. 
D) Tax preferences do not improve the accurate measurement of the tax base.

Question 14

Which of the following statements does not describe the Keynesian standard of tax efficiency?

Accepted Answer

A) An efficient tax encourages economic growth. 
B) An efficient tax encourages full employment. 
C) An efficient tax encourages price-level stability. 
D) All of the above describe the Keynesian standard of tax efficiency. 
A) An efficient tax encourages economic growth. 
B) An efficient tax encourages full employment. 
C) An efficient tax encourages price-level stability. 
D) All of the above describe the Keynesian standard of tax efficiency.

Question 15

The federal government is not required to pay interest on the national debt.

Accepted Answer

A) True 
 B)False

Question 16

The U.S.individual income tax has always used a progressive rate structure.

Accepted Answer

A) True 
 B)False

Question 17

Supply-side economic theory.

Accepted Answer

A) Predicts that a decrease in the highest income tax rates will cause an increase in government revenues. 
B) Is inconsistent with the substitution effect. 
C) Was a clear failure following the Reagan administration tax cuts of the 1980s. 
D) Predicts that taxpayers will save their tax windfall from a rate cut rather than spend or investment the windfall. 
A) Predicts that a decrease in the highest income tax rates will cause an increase in government revenues. 
B) Is inconsistent with the substitution effect. 
C) Was a clear failure following the Reagan administration tax cuts of the 1980s. 
D) Predicts that taxpayers will save their tax windfall from a rate cut rather than spend or investment the windfall.

Question 18

Jurisdiction M imposes an individual income tax based on the following schedule.   Which type of rate structure does this tax use?

Accepted Answer

A) Proportionate 
B) Regressive 
C) Progressive 
D) Multi-bracket 
A) Proportionate 
B) Regressive 
C) Progressive 
D) Multi-bracket

Question 19

Congress recently amended the tax law to make it easier for individuals to file their income tax returns electronically (online).Which of the following statements is true?

Accepted Answer

A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax. 
A) The amendment is intended to improve the efficiency of the tax. 
B) The amendment is intended to improve the equity of the tax. 
C) The amendment is intended to improve the simplicity of the tax. 
D) The amendment is intended to improve the convenience of the tax.

Question 20

Which of the following statements about horizontal equity is false?

Accepted Answer

A) Horizontal equity focuses on a rational and impartial measurement of the tax base. 
B) Horizontal equity focuses on the measurement of taxpayers' ability to pay. 
C) If persons with equal ability to pay a tax owe an equal amount of tax,the tax is horizontally equitable. 
D) None of the above is false. 
A) Horizontal equity focuses on a rational and impartial measurement of the tax base. 
B) Horizontal equity focuses on the measurement of taxpayers' ability to pay. 
C) If persons with equal ability to pay a tax owe an equal amount of tax,the tax is horizontally equitable. 
D) None of the above is false.

Which of the following statements concerning tax preferences is true?

According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.

Assume that Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?

Which of the following statements about tax rate structures is true?

Assume that Congress plans to amend the federal income tax to provide a deduction for the first $2,400 of residential rent paid by families with incomes below the federal poverty level.Which of the following statements is true?

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Vervet County levies a real property tax based on the following schedule. Which of the following statements is false?

According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Congress originally enacted the federal estate and gift taxes to improve:

Which of the following statements concerning a regressive tax rate structure is true?

Which of the following statements concerning tax preferences is false?

Which of the following statements does not describe the Keynesian standard of tax efficiency?

The federal government is not required to pay interest on the national debt.

The U.S.individual income tax has always used a progressive rate structure.

Supply-side economic theory.

Jurisdiction M imposes an individual income tax based on the following schedule. Which type of rate structure does this tax use?

Congress recently amended the tax law to make it easier for individuals to file their income tax returns electronically (online).Which of the following statements is true?

Which of the following statements about horizontal equity is false?

Taxes and Taxing Jurisdictions

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, partnerships, llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters

Exam 2: Policy Standards for a Good Tax

Which of the following statements concerning tax preferences is true?

According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.

Assume that Congress plans to amend the federal income tax to provide a deduction for the cost of energy-efficient fluorescent light bulbs.Which of the following statements is true?

Which of the following statements about tax rate structures is true?

Assume that Congress plans to amend the federal income tax to provide a deduction for the first $2,400 of residential rent paid by families with incomes below the federal poverty level.Which of the following statements is true?

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Vervet County levies a real property tax based on the following schedule. Which of the following statements is false?

According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.

Jurisdiction M imposes an individual income tax based on the following schedule. Which of the following statements is true?

Congress originally enacted the federal estate and gift taxes to improve:

Which of the following statements concerning a regressive tax rate structure is true?

Which of the following statements concerning tax preferences is false?

Which of the following statements does not describe the Keynesian standard of tax efficiency?

The federal government is not required to pay interest on the national debt.

The U.S.individual income tax has always used a progressive rate structure.

Supply-side economic theory.

Jurisdiction M imposes an individual income tax based on the following schedule. Which type of rate structure does this tax use?

Congress recently amended the tax law to make it easier for individuals to file their income tax returns electronically (online).Which of the following statements is true?

Which of the following statements about horizontal equity is false?

Taxes and Taxing Jurisdictions

Taxes As Transaction Costs

Maxims of Income Tax Planning

Tax Research

Taxable Income From Business Operations

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Nontaxable Exchanges

Sole Proprietorships, partnerships, llcs, and S Corporations

The Corporate Taxpayer

The Choice of Business Entity

Jurisdictional Issues in Business Taxation

The Individual Tax Formula

Compensation and Retirement Planning

Investment and Personal Financial Planning

Tax Consequences of Personal Activities

The Tax Compliance Process

Filters