Exam 17: Taxation and Resource Allocation

Rhode Island has enacted a substantial increase in the tax on employers that finances the workman's compensation system. For some employers, the tax is about $25 per $100 paid in wages. Employers claim they cannot afford to pay the tax. Under which of the following conditions will the actual burden of the tax fall on employers?

If demand is more elastic, the portion of an excise tax borne by a buyer will

If a tax is proportional, the average tax rate

Examples of indirect taxes are

The head tax is regressive.

Faced with a shortage of funds to pay claims, the workman's compensation systems in many states have been forced to raise the workman's compensation tax rate substantially. The tax is paid by employers. Employers have complained that they cannot afford the tax and threaten to go out of business. Assuming the supply of labor is very inelastic, one can argue that ultimately the burden of this tax actually will rest

State and local governments typically spend most of their budgets on providing

Suppose Mishka buys 15 apples per month her total tax burden from a $3 per apple tax is $100 every month.

Under a proportional tax, the fraction of income paid in taxes

Explain the excess burden of a tax on luxury yachts.

Briefly and concisely define the following terms: a. fiscal federalism b. horizontal equity c. vertical equity d. benefits principle of taxation

Above a certain income, the marginal social security tax drops to zero.

A payroll tax with a 4.5 percent tax rate and exemption for income above $42,000 is

Why do many economists rate the income tax high in efficiency and equity terms?

Social Security payroll taxes are

The notion that equally situated individuals should be taxed equally is referred to as

Harun earned $50,000 in salary and paid $10,000 in federal taxes. If he receives $2,000 in interest payments from municipal bonds,

The people most likely to pay little personal income tax to the U.S. government are

What is the flypaper theory of tax incidence? This theory is typically wrong. Why?

Property taxes are the main source of funding for public schools.