Question 1

According to the H-S definition of income,employer contributions are excluded from money income.

Accepted Answer

A) True 
 B)False  True

Question 2

Actual taxes paid divided by the taxable base is the

Accepted Answer

A) adjusted gross tax rate. 
B) gross tax rate. 
C) effective tax rate. 
D) individual tax rate. 
A) adjusted gross tax rate. 
B) gross tax rate. 
C) effective tax rate. 
D) individual tax rate. C

Question 3

Unreimbursed medical expenses in excess of 8.5% of AGI are tax deductible.

Accepted Answer

A) True 
 B)False  False

Question 4

Tax expenditures are revenues that

Accepted Answer

A) are always recouped during tax season. 
B) only apply to large corporations. 
C) are needed to get full exemptions. 
D) are forgone due to preferential tax treatment. 
A) are always recouped during tax season. 
B) only apply to large corporations. 
C) are needed to get full exemptions. 
D) are forgone due to preferential tax treatment.

Question 5

The Haig-Simons definition of income includes

Accepted Answer

A) employer pension contributions and insurance purchases. 
B) transfer payments. 
C) income in-kind. 
D) all of the above. 
A) employer pension contributions and insurance purchases. 
B) transfer payments. 
C) income in-kind. 
D) all of the above.

Question 6

Which of the following is (are)indexed to inflation?

Accepted Answer

A) standard deduction 
B) employer contributions to pensions 
C) gifts and inheritances 
D) none of the above 
A) standard deduction 
B) employer contributions to pensions 
C) gifts and inheritances 
D) none of the above

Question 7

The standard deduction for two individuals is higher than the standard deduction for a married couple,causing a "marriage tax."

Accepted Answer

A) True 
 B)False

Question 8

A Roth IRA differs from a traditional IRA in that

Accepted Answer

A) the Roth IRA allows for savings towards retirement. 
B) the Roth IRA is phased out at certain income levels. 
C) the Roth IRA is not tax deductible at the time it is deposited. 
D) all of the above. 
A) the Roth IRA allows for savings towards retirement. 
B) the Roth IRA is phased out at certain income levels. 
C) the Roth IRA is not tax deductible at the time it is deposited. 
D) all of the above.

Question 9

Consider an individual who earns $95,000,has two children,pays $6,000 in child care expenses for one child,pays $19,000 in college tuition for the other child,pays $6,500 in mortgage interest (mortgage interest is tax deductible),and pays $9,600 in medical expenses.Medical expenses in excess of 7.5 percent of one's income are deductible.Personal exemptions are $3,050 per person (including the tax filer).When the individual's income is $30,000 or above,he / she gets a 12% child care credit.A college credit of 9% of tuition costs is given to those that have income less than $90,000.Her statutory marginal tax rate is 15 percent.What is her actual or effective marginal tax rate?

Accepted Answer

Final taxes owed are

Question 10

Suppose you paid $500,000 for an asset.You hold the asset for five years.The interest rate that you get for the asset is 10%.Assume the tax rate on capital gains is 20%.
(A)If capital gains are taxed only when the asset is realized,how much will you have earned on the asset?
(B)Suppose that capital gains are taxed annually instead of at realization.How much will you have earned on the asset?
(C)How big is the difference in the two taxing schemes?

Accepted Answer

(A)$500,000 x (1.10)⁵- $500,000

Question 11

President Obama proposes reintroducing the 36% and 39.5% tax brackets.

Accepted Answer

A) True 
 B)False

Question 12

The lowest marginal tax rate used in the United States is

Accepted Answer

A) 10 percent. 
B) 28 percent. 
C) 31 percent. 
D) 39.6 percent. 
A) 10 percent. 
B) 28 percent. 
C) 31 percent. 
D) 39.6 percent.

Question 13

Since 1986 there have been over 15,000 changes to the tax code.

Accepted Answer

A) True 
 B)False

Question 14

Only realized capital gains are included in taxable income.

Accepted Answer

A) True 
 B)False

Question 15

Should state taxes paid be deductable on federal taxes?

Accepted Answer

Opinions vary on this issue.Some argue t

Question 16

Suppose there is a simple tax system that says you pay 10% for income up to $10,000,25% for income between $10,000 and $50,000,and 35% for all income above $50,000.Mr.Campbell has income of $72,000.Mrs.Campbell has income of $55,000.
(A)What is Mr.Campbell's individual tax liability? Mrs.Campbell's?
(B)What is their liability if they file a joint return?
(C)Is there a marriage penalty? If so,how much is it?

Accepted Answer

(A)Mr.Campbell: [(10,000*0.10)+ (40,000*

Question 17

Discuss the advantages of using an income tax system such as the one discussed in this chapter,as opposed to a consumption tax.

Accepted Answer

Using income as the unit of ta

Question 18

The current federal tax structure has______ tax brackets.

Accepted Answer

A) 5 
B) 6 
C) 7 
D) 8 
A) 5 
B) 6 
C) 7 
D) 8

Question 19

Which would a taxpayer in the 35% tax bracket prefer: a $2,000 tax exemption or a $700 tax credit? What if the taxpayer were in the 25% tax bracket?

Accepted Answer

For 35% taxpayer: exemption $2,000(0.35)

Question 20

Investors considering switching capital assets may also consider the potential tax liability and decide not to switch is refereed as bracket creep.

Accepted Answer

A) True 
 B)False

According to the H-S definition of income,employer contributions are excluded from money income.

Actual taxes paid divided by the taxable base is the

Unreimbursed medical expenses in excess of 8.5% of AGI are tax deductible.

Tax expenditures are revenues that

The Haig-Simons definition of income includes

Which of the following is (are)indexed to inflation?

The standard deduction for two individuals is higher than the standard deduction for a married couple,causing a "marriage tax."

A Roth IRA differs from a traditional IRA in that

President Obama proposes reintroducing the 36% and 39.5% tax brackets.

The lowest marginal tax rate used in the United States is

Since 1986 there have been over 15,000 changes to the tax code.

Only realized capital gains are included in taxable income.

Should state taxes paid be deductable on federal taxes?

Discuss the advantages of using an income tax system such as the one discussed in this chapter,as opposed to a consumption tax.

The current federal tax structure has______ tax brackets.

Which would a taxpayer in the 35% tax bracket prefer: a $2,000 tax exemption or a $700 tax credit? What if the taxpayer were in the 25% tax bracket?

Investors considering switching capital assets may also consider the potential tax liability and decide not to switch is refereed as bracket creep.

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters

Exam 17: The Personal Income Tax

According to the H-S definition of income,employer contributions are excluded from money income.

Actual taxes paid divided by the taxable base is the

Unreimbursed medical expenses in excess of 8.5% of AGI are tax deductible.

Tax expenditures are revenues that

The Haig-Simons definition of income includes

Which of the following is (are)indexed to inflation?

The standard deduction for two individuals is higher than the standard deduction for a married couple,causing a "marriage tax."

A Roth IRA differs from a traditional IRA in that

President Obama proposes reintroducing the 36% and 39.5% tax brackets.

The lowest marginal tax rate used in the United States is

Since 1986 there have been over 15,000 changes to the tax code.

Only realized capital gains are included in taxable income.

Should state taxes paid be deductable on federal taxes?

Discuss the advantages of using an income tax system such as the one discussed in this chapter,as opposed to a consumption tax.

The current federal tax structure has______ tax brackets.

Which would a taxpayer in the 35% tax bracket prefer: a $2,000 tax exemption or a $700 tax credit? What if the taxpayer were in the 25% tax bracket?

Investors considering switching capital assets may also consider the potential tax liability and decide not to switch is refereed as bracket creep.

Introduction

Tools of Positive Analysis

Tools of Normative Analysis

Public Goods

Externalities

Political Economy

Education

Cost-Benefit Analysis

The Health Care Market

Government and the Market for Health Care

Social Security

Income Redistribution: Conceptual Issues

Expenditure Programs for the Poor

Taxation and Income Distribution

Taxation and Efficiency

Efficient and Equitable Taxation

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Fundamental Tax Reform: Taxes on Consumption and Wealth

Public Finance in a Federal System

Filters