Principles of Taxation

Business

Quiz 2 :
Policy Standards for a Good Tax

Quiz 2 :
Policy Standards for a Good Tax

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A tax meets the standard of sufficiency if it is easy for people to pay the tax.
Free
True False
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Answer:

False

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The federal government is not required to pay interest on the national debt.
Free
True False
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Answer:

False

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A static forecast of the revenue effect of a tax rate change assumes that the tax base does not change.
Free
True False
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Answer:

True

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A dynamic forecast of the revenue effect of a tax rate change assumes that the tax base does not change.
True False
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The federal Social Security tax burden on employees has not increased since 1990 because the tax rate has not increased since that year.
True False
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If State H increases its sales tax rate by 1%,its sales tax revenue must also increase by 1%.
True False
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The city of Berne recently enacted a 10% tax on the price of a subway ticket.Consequently,Mrs.Lane now walks to work instead of taking the subway.Her behavior illustrates the substitution effect of a tax increase.
True False
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Jurisdiction P recently increased its income tax rate.A taxpayer who reacts to the increase by working harder to earn more income is demonstrating the income effect of the rate increase.
True False
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According to supply-side economic theory,a decrease in tax rates for high-income individuals could actually cause an increase in tax revenue.
True False
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Supply-side economic theory holds that people who benefit from a tax rate reduction will spend their tax windfall on consumption goods.
True False
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State use taxes are more convenient for individual consumers than state sales taxes.
True False
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The Internal Revenue Service's cost of collecting $100 of tax revenue is about $3.
True False
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A convenient tax has low compliance costs for taxpayers and low collection and enforcement costs for the government.
True False
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According to the classical concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.
True False
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According to the Keynesian concept of efficiency,an efficient tax should be neutral in its effect on free market allocations of economic resources.
True False
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A tax meets the standard of efficiency if it generates enough revenue to pay for the public goods and services provided by the government.
True False
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A provision in the tax law designed to encourage a specific economic behavior is a tax preference.
True False
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A tax should result in either horizontal or vertical equity across taxpayers.
True False
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Changes in the tax law intended to make the measurement of taxable income more precise usually make the tax law less complex.
True False
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Vertical equity focuses on measurement of the tax base,and horizontal equity focuses on the tax rate structure.
True False
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