12 Flashcards
Why does deadweight loss occur
Taxes distort behavior
Which one of the following is the best example of a tax justified under the benefit principle
A)an inheritance tax
B) A hockey ticket tax to help pay for the building of a new hockey arena
C) and income tax to finance space exploration
D) A payroll tax to help fund education
B
Which one of the following would be an effect of replacing income tax with a flat rate consumption tax
A) it would encourage less savings
B) it would make the tax system more progressive
C) it would mean that to families with the same income would not necessarily have the same tax bill
D) it would decrease the after-tax interest-rate received on bank accounts
D
The marginal tax rate is
The percentage of any additional income that is taxed
If a person pays $2000 tax on income of $10,000, and $3000 on her income of $20,000 what is the tax structure
A) average
B) marginal
C) Regressive
D) Progressive
C
Supposed to persons average tax rate is 25% and the marginal tax rate is 40%. It’s a person receives an additional $100 of income, which one of the following would be the amount of the implied additional tax payment?
A) $10
B) $25
C) $40
D) $65
C
Who bears the entire burden of the incidents of the corporate income tax
People
Which one of the following describes the most basic trade off in economics?
A). Between efficiency and equity
B). Between vertical and horizontal equity
C). Between business taxes and individual taxes
D) between the need of many and the desires of the few
A
Which of the following is characteristic of a tax system that satisfies the principle of vertical equity?
A) The average tax rate is higher for those with higher incomes
B) The marginal tax rate is the same for all
C). Those with high incomes pay more taxes
D). Those in similar situations pay the same amount of tax
C
Which one of the following is the biggest source of revenue for the Canadian federal government?
A) property taxes
B) individual income taxes
C) corporate income taxes
D) sales taxes
B
Which one of the following is the largest budget item for provincial governments?
A) transportation
B). Social services
C) education
D) healthcare
D healthcare
Which one of the following is the most efficient tax?
Lump sum tax
Which one of the following is the best example of attack said usually justified on the grounds of ability to pay? A) sales tax B) property tax C) corporate income tax D) Progressive income tax
D
Which one of the following defines an efficient tax?
A) when that raises large amounts of money quickly
B). One that generates revenue at the least cost to buyers
C) One that satisfies both vertical and horizontal equity
D) One that is easy to administer
B
Which one of the following is associated with vertical equity and horizontal equity?
A) The benefits principle of taxation
B). The ability to pay principle of taxation
C) falling marginal tax rates
D) rising marginal tax rate
B