Exam 12: The Design of the Tax System

Costas faces a progressive federal income tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. In addition, he must pay 5 percent of his income in state income tax and 15.3 percent of his labor income in federal payroll taxes. Costas earns $70,000 per year in salary and another $20,000 per year in non-labor income. What is his average tax rate, and what is his marginal tax rate on his salary?

Table 12-10 -Refer to Table 12-10. If Jace has $33,000 in taxable income, his tax liability will be

As government debt increases,

Briefly evaluate the advantages and disadvantages of a lump-sum tax.

Table 12-11 -Refer to Table 12-11. If Peggy has taxable income of $43,000, her marginal tax rate is

"Income security" programs comprised 33 percent of the federal government's spending in 2011. Give a few examples of the programs included in this category.

Some colleges charge all students the same "activity fee." Suppose that students differ by how many campus activities they engage in. This charge is most like

The claim that all citizens should make an "equal sacrifice" to support government programs is usually associated with

The government taxes corporate income on the basis of

Suppose that in 2020 the average citizen's federal tax bill is $11,888 per person, and total federal spending is $13,997 per person. In 2020, the federal government will have

State and local governments

In 1789 the percentage of the average American's income that went to pay taxes was about

By law, all states must have a state income tax.

Nancy paid a tax of $0.50 on the last dollar she earned in 1999. Nancy's marginal tax rate in 1999 was

What are the two largest categories of federal tax receipts?

Which of the following is not an advantage of a lump-sum tax in comparison to other types of taxes?

Table 12-6 The table below shows the marginal tax rates for an unmarried taxpayer for various levels of taxable income. -Refer to Table 12-6. For this tax schedule, what is the marginal tax rate for an individual with taxable income of $49,000?

If a poor family has three children in public school and a rich family has two children in private school, the ability-to- pay principle would suggest that

The largest budgetary expense for a typical state or local government is

Suppose that the government taxes income in the following fashion: 30 percent of the first $20,000, 50 percent of the next $30,000, and 60 percent of all income over $50,000. Ted earns $40,000, and Robin earns $60,000. Which of the following statements is correct?