Exam 6: Funding the Public Sector

The marginal income tax rate is equal to

-Using the above figure, which of the lines in the above diagram represents a progressive tax?

-Using the above table, a unit tax of $2 is imposed on the product. How much of the tax is paid by the producer?

The government imposes a unit excise tax on bubble gum. What happens as a result?

When the purchase price of an asset is less than its sale price, then there is a

Suppose the capital gains tax is 28 percent and you purchased a house ten years ago for $80,000. If you sold the house today you would get $140,000. Your tax liability would be

A government wishing to maximize its tax revenues should

Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns $32,000 a year and Family B earns $70,000 a year. Both families each receive a ten percent raise. What is the marginal tax rate of each and what is the extra tax paid by each after the raise?

Explain why it is that how much consumers pay for an excise tax depends on how responsive they are to a given change in market price.

In a progressive tax system

Suppose the tax rate on the first $10,000 income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $50,000. What is the marginal and average tax rate for Family A?

Governments have to rely on taxes for financing because

How would the market for smartphones be affected if the government charged an excise tax of $5.00 on each smartphone sold?

All of the following are possible funding sources for the government EXCEPT

What determines the proportion of a unit excise tax that will be passed on to consumers in the form of higher prices?

In order for the government to collect taxes, the government must first establish a(n)

A typical capital gain is experienced by

Dynamic tax analysis is based on the recognition that as tax rates are increased

Briefly compare the three tax systems based on the relationship between the marginal tax rate and the average tax rate as income rises.

-Refer to the above figures. Which panel represents the expected relationship between tax revenue and the sales tax rate if dynamic tax analysis is used?