Microeconomics Chapter 19 Mcgraw Hill

President Trump proposed a billionaire minimum income tax (BMIT) that targets anyone with more than $100 million in income in any given year.

False

The effective tax rate refers to the actual taxes paid as a percentage of taxable income.

False

Public housing is an example of

In-kind income

If income is distributed equally, then the

Lorenz Curve is a straight line

Income distribution is typically measured using

Personal income

To make a tax system more progressive, policy makers could

Raise the marginal tax rates for higher incomes

Which of the following was a basic feature of the Tax Relief Act of 2001?

Reduction of Marginal Taxes

Which term is used to describe the phenomenon in which successful people avoid living or working in high-tax countries?

Tax Migration

Public Education is an in-kind benefit

True

A marginal tax rate that is too high can cause all of the following except

businesses to produce more

If a tax system has no deductions, exemptions, or other loopholes, then the effective tax rate will be

equal to the nominal tax rate

Luis makes $50,000 per year as a computer programmer and pays $6,000 in taxes while Hector makes $50,000 per year as a roofing contractor and pays $7,000 in taxes, then this is an example of

horizontal inequity

An economy with nominal tax rates significantly higher than effective tax rates has

loopholes in the tax code

If the percentage of income paid in taxes increases as income rises, then the tax system is

progressive

The size distribution of income

tells how personal income is divided up among households or income classes.

Tax incidence most accurately refers to

the distribution of the real burden of a tax

Personal income is

the income received by households before payment of personal taxes.

Assume the marginal tax rate is 10 percent for the first $9,875 of income, 12 percent for income between $9,876 and $40,125, and 22 percent for income between $40,126 and $85,525. If Sarah has taxable income equal to $80,000 for the year, then what is her tax bill rounded to the nearest $100?

$13,400