Exam 12: The Design of the Tax System

Suppose the government imposes a tax of 15 per cent on the first $70 000 of income and 20 per cent on all incomes above $70 000, what are the tax liability and the marginal tax rate for a person whose income is $80 000?

An income tax in which the average tax rate is the same for all taxpayers would be considered a regressive tax.

Incentives to work and save are reduced when:

Tax avoidance can occur unintentionally.

In order to construct a more complete picture of the economic burden of government across income classes, economists usually:

Which of the following tax systems is the fairest?

Many economists have suggested that workers and consumers bear much of the burden of company income tax.In the light of this suggestion, explain why the company income tax is so popular among voters.How does the 'flypaper theory' of tax incidence relate to the company income tax?

According to the information provided, if the government imposes a tax of $20 on every visit to the beach, the deadweight loss associated with the tax is:

The most important taxes for state and local governments in Australia are individual and company income taxes.

There is little disagreement among people about tax policy because most people attach the same weights to the goals of equity and efficiency.

The amount of tax owed by a family is:

The GST can be described as a:

There is little disagreement about what constitutes tax equity.

Taxes have no deadweight loss when:

The most appropriate measure of the sacrifice made by a taxpayer is the:

It is only if a taxpayer has a very low income that his average tax rate will equal his marginal tax rate.

Attempts by taxpayers to illegally reduce their tax liability are termed:

The 'poverty trap' refers to the problem where low income earners are effectively taxed at a high marginal tax rate when they begin to work more, and consequently lose some of their government benefits.

Which of the following is a tax system in which all taxpayers pay the same percentage of their income in taxes?

Which of the following statements least accurately reflects concerns about tax equity?