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.