Exam 12: The Design of the Tax System

Suppose New York City passes a local "big gulp" tax that taxes carbonated beverages larger than 20 ounces if they contain sugar or high fructose corn syrup. If the revenue from the "big gulp" tax is earmarked for diabetes research, the "big gulp" tax may be justified

The amount of income tax owed by a family is

Give an example of a tax system where the marginal tax rate would equal the average tax rate.

Table 12-15 -Refer to Table 12-15. The tax system is

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his marginal tax rate is

Rank the following state and local government expenditure categories from smallest to largest.

If a government sells debt to help meet its expenditures, then the government has a

The ability-to-pay principle claims that a person should pay taxes according to

Rank the following state and local government expenditure categories from largest to smallest.

If we want to gauge how much the income tax system distorts incentives, we should use the

Special tax treatment given to specific types of behavior are called

Tax evasion is illegal, but tax avoidance is legal.

Scenario 12-3 Suppose Roger and Regina receive great satisfaction from their consumption of cheesecake. Regina would be willing to purchase only one slice and would pay up to $8 for it. Roger would be willing to pay $11 for his first slice,$9 for his second slice, and $5 for his third slice. The current market price is $5 per slice. -Refer to Scenario 12-3. Assume that the government places a $4 tax on each slice of cheesecake and that the new equilibrium price is $9. Which of the following statements is correct?

According to the ability-to-pay principle, it is fair for people to pay taxes based on the amount of government services that they receive.

Which tax system requires higher-income taxpayers to have lower tax rates, even though they pay a larger amount of tax when compared to lower-income taxpayers?

Table 12-1 -Refer to Table 12-1. Assume that the price of a weekend ski pass is $45 and that the price reflects the actual unit cost of providing a weekend of skiing. Suppose the government imposes a tax of $12 on skiing, which raises the price of a weekend ski pass to $57. How much tax revenue is collected from these four skiers?

Which of the following programs is not included in the federal income security spending?

Like spending on Social Security, the share of federal government spending on Medicare has risen substantially over time. This is most likely a result of

Deadweight losses represent the

Many people consider lump-sum taxes to be unfair to low-income taxpayers.