Question 1

Sales taxes are generally progressive.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 2

Assume two people,Tom and Rose,live for two periods and are taxed on consumption in both periods.In period 0,Rose has consumption of 50.In period 1,Rose has consumption of 50.Tom has consumption of 40 in period 0.Use the formula below for lifetime consumption tax liability,Ri,to find out what Tom's period 1 consumption must be,to ensure that tax liabilities between the two are equal,if the consumption tax rate is 9% and the rate of interest is 4%,

Accepted Answer

@#LAT-DLM& . Set these equations equal f

Question 3

A consumption tax generally will be borne according to labor earnings.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 4

A unit tax is

Accepted Answer

A)  levied at different rates on the purchase of different commodities. 
B)  less than 0. 
C)  a percentage of the value of the purchase. 
D)  a given amount for each unit purchased. 
A)  levied at different rates on the purchase of different commodities. 
B)  less than 0. 
C)  a percentage of the value of the purchase. 
D)  a given amount for each unit purchased.

Question 5

One advantage of a consumption tax is that there are fewer problems with inflation.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 6

A trust that is the legal owner of a life insurance policy is

Accepted Answer

A)  a policy holder. 
B)  an insurance trust. 
C)  a trust fund. 
D)  none of these answer options are correct. 
A)  a policy holder. 
B)  an insurance trust. 
C)  a trust fund. 
D)  none of these answer options are correct.

Question 7

Value-added taxes (VAT)are very popular in the United States.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 8

Why might an individual set up trusts?

Accepted Answer

A)  as a strategy to avoid taxes on wealth. 
B)  for lower insurance premiums. 
C)  to insure the security of a loan. 
D)  to have a steady stream of income during retirement. 
A)  as a strategy to avoid taxes on wealth. 
B)  for lower insurance premiums. 
C)  to insure the security of a loan. 
D)  to have a steady stream of income during retirement.

Question 9

Little Percy lives in two periods.His earnings in the present are 150; in the future he will earn 10% more than today.The interest rate is 5 percent.If his consumption today is 160,what is the most he can consume in the future?

Accepted Answer

Lifetime earnings must equal l

Question 10

General sales taxes totaled 226.7 billion dollars as a source of state revenue in 2008.

Accepted Answer

A)  True 
B)  False 
C)  Uncertain 
A)  True 
B)  False 
C)  Uncertain

Question 11

A wealth tax can be justified because it

Accepted Answer

A)  helps to correct certain (inevitable)problems that arise in the administration of an income tax. 
B)  the higher an individual's wealth,the greater his or her ability to pay,other things - including income - being the same. 
C)  reduces the concentration of wealth,which is desirable socially and politically. 
D)  are payments for benefits that wealth holders receive from government. 
E)  all of these answer options are correct. 
A)  helps to correct certain (inevitable)problems that arise in the administration of an income tax. 
B)  the higher an individual's wealth,the greater his or her ability to pay,other things - including income - being the same. 
C)  reduces the concentration of wealth,which is desirable socially and politically. 
D)  are payments for benefits that wealth holders receive from government. 
E)  all of these answer options are correct.

Question 12

Many states have no state-level personal income tax.How do you think that effects expenditure decisions?

Accepted Answer

States that do not have income taxes rel

Question 13

A tax on consumption for those who are nonsavers

Accepted Answer

A)  is equivalent to a tax on income. 
B)  causes income gains to increase dramatically. 
C)  would be preferred to a tax on wealth. 
D)  makes it difficult to tell what the result for the nonsavers would be. 
A)  is equivalent to a tax on income. 
B)  causes income gains to increase dramatically. 
C)  would be preferred to a tax on wealth. 
D)  makes it difficult to tell what the result for the nonsavers would be.

Question 14

This chapter has spent a lot of time dealing with issues of wealth and consumption.One suggestion has been to have a tax on wealth.What are some of the benefits of this proposal?

Accepted Answer

Wealth taxes help to correct c

Question 15

Throughout this discussion of taxes,there has been repeated mention of the need for progressivity in the tax system.Why is this an important goal for tax systems in most societies?

Accepted Answer

Society generally desires a sy

Sales taxes are generally progressive.

A consumption tax generally will be borne according to labor earnings.

A unit tax is

One advantage of a consumption tax is that there are fewer problems with inflation.

A trust that is the legal owner of a life insurance policy is

Value-added taxes (VAT)are very popular in the United States.

Why might an individual set up trusts?

Little Percy lives in two periods.His earnings in the present are 150; in the future he will earn 10% more than today.The interest rate is 5 percent.If his consumption today is 160,what is the most he can consume in the future?

General sales taxes totaled 226.7 billion dollars as a source of state revenue in 2008.

A wealth tax can be justified because it

Many states have no state-level personal income tax.How do you think that effects expenditure decisions?

A tax on consumption for those who are nonsavers

This chapter has spent a lot of time dealing with issues of wealth and consumption.One suggestion has been to have a tax on wealth.What are some of the benefits of this proposal?

Throughout this discussion of taxes,there has been repeated mention of the need for progressivity in the tax system.Why is this an important goal for tax systems in most societies?

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

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Public Finance in a Federal System

Filters

Exam 21: Fundamental Tax Reform: Taxes on Consumption and Wealth

Sales taxes are generally progressive.

A consumption tax generally will be borne according to labor earnings.

A unit tax is

One advantage of a consumption tax is that there are fewer problems with inflation.

A trust that is the legal owner of a life insurance policy is

Value-added taxes (VAT)are very popular in the United States.

Why might an individual set up trusts?

Little Percy lives in two periods.His earnings in the present are 150; in the future he will earn 10% more than today.The interest rate is 5 percent.If his consumption today is 160,what is the most he can consume in the future?

General sales taxes totaled 226.7 billion dollars as a source of state revenue in 2008.

A wealth tax can be justified because it

Many states have no state-level personal income tax.How do you think that effects expenditure decisions?

A tax on consumption for those who are nonsavers

This chapter has spent a lot of time dealing with issues of wealth and consumption.One suggestion has been to have a tax on wealth.What are some of the benefits of this proposal?

Throughout this discussion of taxes,there has been repeated mention of the need for progressivity in the tax system.Why is this an important goal for tax systems in most societies?

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

The Personal Income Tax

Personal Taxation and Behavior

The Corporation Tax

Deficit Finance

Public Finance in a Federal System

Filters