Exam 12: The Design of the Tax System

Social security is an income support measure, designed primarily to maintain the living standards of the poor.

Why was the introduction of the GST in Australia accompanied by a reduction in income tax for some taxpayers?

Suppose a tax is imposed on cameras.The administrative burden of the tax comes from:

Which of the following is NOT a tax levied in Australia?

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

'A $1000 tax paid by a poor person may be a larger sacrifice than a $10 000 tax paid by a wealthy person'.This is an argument based on:

The marginal tax rate is the extra taxes paid on an additional dollar of income.

If your income is $80 000 and you paid $500 car registration, your:

'Loopholes' refer to the detailed provisions of the tax code that are abused by individuals and companies to avoid paying tax.

Use an example to demonstrate the difference between marginal and average tax rates.What useful information is conveyed by each of these measures?

Suppose the government imposes a tax of 32 per cent on the first $40 000 of income, and 45 per cent on all income above $40 000, what is the marginal tax rate when income is $80 000?

Lump-sum taxes are rarely used in the real world because:

Tax schemes that satisfy the benefits principle are always considered to be the most equitable.

One of the benefits from switching taxation away from income towards consumption is that:

The benefits principle of taxation can be used to argue that wealthy citizens should pay higher taxes than poorer ones on the basis that:

If tax laws become simplified then:

Administrative burden and changes in behaviour are inefficiencies of any tax system.

The efficiency of the tax system refers to:

The indirect effects from taxation would include:

One tax system is less efficient than another if it: