micro: chapter 6
Which of the following explains the difference between the average tax rate and the marginal tax rate?
The average tax rate uses total income while the marginal tax rate refers to the tax rate of the last dollar earned.
Which of the following is the most important source of revenue for the federal budget?
The federal personal income tax.
A town in New York currently has a $1.00 per unit tax on sales of cigarettes. Annually, 50,000 packs of cigarettes are sold, and so the town collects $50 comma 000. The mayor proposes that the tax be increased to $2.00 per pack. If the mayor uses static tax analysis, he expects that the new tax revenue will be $ nothing. (Round your answer to the nearest dollar.)
$100,000 decrease less than
Which of the following is consistent with dynamic tax analysis?
An increase in the tax rate will likely cause a decrease in the tax base.
Suppose that a state government implements a tax on mechanics' labor time at all state auto repair shops in order to enhance its tax revenues. One year later the government is disappointed to find that not only is the amount of tax collected small, but that in-state auto repair work significantly declined. This state government apparently utilized which type of tax analysis?
Static tax analysis.
Stephanie works 40 hours a week at a wage rate of $25. Thus, her total weekly income is $1000. On this income, she pays total taxes of $80.00. However, she calculates that on the last hour that she works, she pays $3.75.
average tax rate: taxes due/total income x 100 8% 25% or 15%
The United States Federal government receives most of its tax revenues from
individual income taxes
Suppose Cameron earns $ 80 comma 000 per year but must pay income taxes according to the tax schedule given in the table to the right. According to the chart, the income tax Cameron faces is a ▼ progressive regressive tax.
progressive 16,750 or 17,000 30% 21%
What is the structure of the U.S. income tax system?
progressive tax system
For purposes of assessing income taxes, there are three official income levels for workers in a small country: high, medium, and low. The table to the right gives the marginal tax rate for the last hour on the job during a 40-hour workweek for each of these three worker types. Based only on this information, this nation's income tax system appears to be ▼ regressive proportional progressive .
regressive
The corporate income tax in the United States
results in individuals' being doubly taxed on corporate earnings.
Which of the following is not a source of funding available to governments?
stock sales
A proportional tax, or flat-rate tax
takes the same percentage of a person's taxable income in tax regardless of their level of income
tax system a average tax rate
tax payment dividing it by its income. 22.2%`
According to the static tax analysis approach to evaluating how changes in tax rates affect government tax collections,
the tax rate will have no effect on the tax base.
the average tax rate is the
total tax paid divided by total income.
