Exam 18: Public Choice, Taxes, and the Distribution of Income

U.S. taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns. This administrative cost

An average tax rate is calculated as

If, as your taxable income decreases, you pay a smaller percentage of your taxable income in taxes, then the tax is

The person or firm that pays a tax bears the burden of the tax.

Which of the following summarizes the information provided by a Lorenz curve?

The excess burden of a tax

The "ability-to-pay" principle of taxation is the normative idea that

Define logrolling. Explain why logrolling often results in legislation that benefits the economic interests of a few, while harming the interests of a larger group of people.

Most economists agree that some of the burden of the corporate income tax

Suppose the government imposes an 8 percent sales tax on clothing items and the tax is levied on sellers. Who pays for the tax in this situation? (Assume that the demand curve is downward sloping and that the supply curve is upward sloping.)

Table 18-12 Table 18-12 shows income distribution data for two countries. Use this data to answer the following questions. -Refer to Table 18-12. a. Draw a Lorenz curve for each country. b. Which country has the more equal distribution of income? c. Based on the Lorenz curves for the two countries, can you determine which country has the more progressive tax system? Explain your answer.

Former Alabama Governor George Wallace ran for president several times, once as a third-party candidate in 1968. Wallace claimed there was "not a dime's worth of difference" between the Democratic and Republican parties during one of his campaigns. How does Wallace's comment relate to the median voter theorem?

The sales tax

Article Summary State tax revenue from marijuana sales in Colorado have surpassed $500 million since its legalization in January 2014. Colorado has imposed three types of state taxes on marijuana: a 2.9% sales tax on medical marijuana, a 15% special sales tax for recreational use, and a 15% excise tax on wholesale marijuana transfers. About half of the accumulated tax revenue has gone to K-12 education, with over $100 million used to fund school construction projects. Twenty-five percent of the tax is being spent on substance abuse prevention and treatment programs. -Refer to the Article Summary. Suppose the sale of marijuana is legalized in Florida, and the state decides to charge a tax of $50 per ounce on each sale, with the state claiming that retailers will bear the entire burden of this tax. Draw a graph illustrating the situation where retail outlets would bear the entire tax burden of $50 per ounce of marijuana. Explain what would need to be true about the demand for marijuana for retailers to bear the entire burden of this tax, and if this would likely occur if marijuana sales were legalized.

What does a Lorenz curve illustrate?

The horizontal-equity principle of taxation is not easy to use in practice because

Which of the following statements refers to rent seeking?

Gasoline taxes that are typically used for highway construction and maintenance are consistent with which of the following principles of taxation?

If the marginal tax rate is equal to the average tax rate as taxable income increases, the tax structure is

From 1970 to 2010, the poverty rate in East Asia rose slightly but the level of poverty in sub-Saharan Africa fell dramatically.