Homework: Chapter 6 Homework – Flashcards
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The marginal tax rate shows (132)
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the extra tax due on an extra dollar of income.
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Which of the following is the largest component of federal spending​ today?
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Social Security
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The marginal income tax rate is equal to
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the change in the tax payment divided by the change in income.
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Excise Tax
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A tax levied on purchases of a particular good or service
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Which of the following is the most important source of revenue for the federal​ budget?
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The federal personal income tax. (The federal personal income tax accounts for about​ 43% of all federal revenues and is paid by all American​ citizens, resident​ aliens, and most others who earn income in the United States.)
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The corporate income tax in the United States
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results in​ individuals' being doubly taxed on corporate earnings. (Because individual stockholders must pay taxes on the dividends they​ receive, which are paid out of​ after-tax profits by the​ corporation, corporate profits are taxed twice.)
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A typical capital gain is experienced by
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selling stock or a mutual fund
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A capital gain results when
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An asset is sold for more than it was purchased
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Reduction or elimination of dividend taxes is​ designed, in​ part, to
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reduce the double taxation burden on individuals.
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Which of the following is an argument that the incidence of corporate taxation falls entirely on​ consumers?
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Corporations pass their tax burdens on to consumers by charging higher prices.
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Local government expenditures depend on which​ taxes?
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Local​ property, sales, and excise taxes
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The sales tax rate applied to all purchases within a state was 0.04​ (4 percent) throughout 2012 but increased to 0.05 ​(5 percent​) during all of 2013. The state government collected all taxes​ due, but its tax revenues were equal to​ $40 million each year. ... Within this​ state, the sales tax base from 2012 to 2013 must have... ...Which of the following could account for this change in the tax​ base?...
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... declined ... A weaker state economy & People avoiding the purchase of taxable items.
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Which of the following is consistent with dynamic tax​ analysis?
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An increase in the tax rate will likely cause a decrease in the tax base (When a government raises its sales tax​ rate, for​ example, consumers have an incentive to cut back on their purchases of items subjected to the higher​ rate, perhaps by buying them in a locale where there is a lower sales tax rate or perhaps no tax rate at all.)
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Sales taxes are
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assessed on the prices paid on a large set of goods and services
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Ad valorem taxes
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are assessed as a percentage of a​ good's price.
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Which of the following statements is TRUE of static tax​ analysis?
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A government receives higher tax revenues by raising the tax rate
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An excise tax of 60 cents is levied on a product. As a result of the​ tax, the price of the product goes from​ $1 to​ $1.40. Which of the following is​ true?
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The consumer pays the majority of the tax but not the entire tax (Since consumers pay 40 cents​ more, and the tax is 60​ cents, consumers pay the majority of the tax. )
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Imposing a tax on sales of a product
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shifts the market supply curve for the product.
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For all employee earnings subject to Social Security​ taxes, what is the current Social Security tax rate for​ employees?
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6.2%
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The Social Security program is financed directly from
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payroll taxes
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The original impetus for Social Security was
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to provide retirement fund for all persons
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