Economics Ch20
One type of inefficiency of a tax---- is burden, which represents the effort to manage and collect----
-Administrative -taxes
Which three of the following concepts are particularly useful in evaluating the costs and benefits of alternative types of taxes?
-Efficiency -Incidence -Revenue
A tax on----- discourages people from working.
-Income
Under a -------tax, also everyone is taxed the same amount, regardless of their economic---- .
-Lump-sum/head -behavior
With the Federal income tax----, each tax is taxed at a ----tax rate, and those in higher tax pay a ----higher percentage of their income.
-bracket -different -brackets
The tax revenue collected is smaller in the market with price-demand, because the equilibrium quantity shrinks more than in a market with a price-demand.
-elastic -inelastic
How much is------ caused by income tax, and how much----- is raised by it, depends on how much workers will reduce the quantity----- of they will supply in response to a---- on wages
-inefficiency -revenue -labor -tax
All else equal, imposing taxes in markets where demand and supply are price----- not only causes less----- but also raises more----
-inelastic -inefficiency -revenue
In the United States, the sale of a house that was used as a primary residence is taxed at a---- rate than other real estate.
-lower
Calculating the revenue raised by a tax is simple: Multiply the---rate by the---of units of the thing being taxed.
-tax -quantity
In an efficient market, a ----- causes the demand curve to shift down by the amount of the----
-tax -tax
Suppose you earned $34,000 in 2010. Using the tax table, it can be said that your average tax rate was _____.
13.1%
Raising taxes means that the government gets more revenue per units sold (the ------ effect). But the higher tax rate causes fewer units to be sold (the ---effect).
Blank 1: price Blank 2: quantity
FICA is usually considered a regressive tax because of which of the following reasons?
Only earnings up to a cap are taxed It taxes only earned wage income
The more people earn, the larger the percentage of their total income they pay. This is consistent with which type of tax?
Progressive
---------incidence of the tax (i.e., who is legally obligated to pay the tax to the government) has no effect on the ------incidence of the tax (i.e., who actually loses surplus as a result of the tax).
Statutory -economic
Many_______ -funded programs, such as public schools and roads, are intended to increase surplus and stimulate ____ growth.
Tax Economic
Total revenue from a tax =
Tax per unit x Number of units.
________change behavior because they alter the incentives faced by market participants.
Taxes
True or false: Just because a tax creates inefficiency does not necessarily mean that the tax is bad.
True
True or false: Under a tax, fewer units are sold.
True- because the taxes raise prices and decrease quantity sold
Two types of inefficiencies associated with taxes are
administrative burden and deadweight loss.
Capital gains are taxed separately from other types of income, under the appropriately-named
capital gains tax.
---loss is the difference between the loss of surplus to taxpayers and the tax revenue collected.
deadweight
When a government spends more than it earns in revenue, we say that it has a budget
deficit
Raising taxes has returns to revenue.
diminishing
The net ------- effect of a tax is specific to each tax, and to each use of government proceeds from the tax.
efficiency
In an efficient market, a tax causes the demand curve to shift down by the amount of the tax because
he effective price paid by consumers is now higher at any given market price.
Forcing richer households to pay higher tax rates would be _____ if richer households respond by changing behaviors to lessen their tax burden. Multiple choice question.
inefficient
A payroll tax is deducted directly from your paycheck, and Multiple choice question.
is used to pay for Social Security and Medicare.
The tax rate corresponding to each tax bracket is a--- rate
marginal
The value of the surplus that is lost to buyers and sellers but converted into tax revenue
may be transferred to someone else through public policies, but it is not lost.
A -----tax is a tax on the wages paid to an employee.
payroll
The U.S. Federal individual income tax is
progressive
The benefits people receive from Social Security are
progressive
Economists and policymakers classify taxes in one of three categories. These three categories are which of the following?
proportional regressive progressive
Tax ------ allows governments to provide goods and services to citizens, from national defense to highway building.
revenue
Tax per unit x Number of units equal total---- from a tax
revenue
A non-specific tax based on the value of a good or service being purchased is called a
sales tax
In the United States, smaller corporations pay _____ percentage of their income compared to larger corporations. Multiple choice question.
smaller
The largest percentage of government spending for a standalone program is spent on
social security
Who is legally obligated to pay the tax to the government is the--- incidence of the tax.
statutory
When a government earns more than it spends, we say it has a budget
surplus
Deadweight loss is the difference between the loss of------- to taxpayers and the tax----- collected.
surplus revenue
The concept of ----- incidence describes how a tax burden is distributed among buyers and sellers, old people or young people, rich people or poor people, and so on.
tax
The surplus that is lost to buyers and sellers but converted into tax revenue is not considered a cost, because
the tax revenue funds public services.
The concept of incidence is used to describe
who bears the burden of any sort of tax.
On average, people with --- incomes spend a higher---- of their income, rather than saving or investing it.
-lower -proportion
As tax rates get higher, we can expect revenue to increase at a slower rate as the--- effect catches up with the-- effect.
-price -quantity
Under a---- , the consumer and producer surplus that is no longer generated is loss.
-tax -deadweight
To determine revenue from an income tax, multiply the ------- per dollar of income by the ---- of dollars of income
-tax -number