Question 1

Citizens expect the government to provide various goods and services making taxes
A)inefficient.
B)equitable.
C)inevitable.
D)intolerable.

Accepted Answer

Taxes are inevitable as they are the means through which the government raises revenue to provide various goods and services that are expected by citizens. The government needs revenue to fund public goods such as infrastructure, education, and public safety. Therefore, taxes are necessary to support the functioning of the government and meet the expectations of the citizens.

Question 2

​The largest source of federal revenue in the United States is:
A)​Social insurance tax
B)the corporate income tax
C)​the individual income tax
D)Foreign aid to the U.S.

Accepted Answer

The individual income tax is the largest source of federal revenue in the United States, accounting for over 50% of all federal revenue. Social insurance taxes (such as the payroll tax) also contribute a significant amount, but individual income tax is the primary source. The corporate income tax and foreign aid to the U.S. are much smaller revenue sources in comparison.

Question 3

Taxes can be justified if the government uses the revenue to
(i)provide public goods such as national defense.
(ii)clean up negative externalities such as water pollution.
(iii)regulate a common resource such as fish in a public lake.
(iv)provide goods with positive externalities such as medical research.
A)(ii) only
B)(ii) and (iii) only
C)(i), (ii), and (iii) only
D)(i), (ii), (iii), and (iv)

Accepted Answer

Taxes can be justified for all the listed purposes: providing public goods, addressing negative externalities, regulating common resources, and supporting goods with positive externalities.

Question 4

Which of the following statements is correct?
A)Equity is more important than efficiency as a goal of the tax system.
B)Efficiency is more important than equity as a goal of the tax system.
C)Both equity and efficiency are important goals of the tax system.
D)Neither equity nor efficiency is an important goal of the tax system.

Accepted Answer

Equity and efficiency are both important goals of the tax system. Equity ensures that the burden of tax is distributed fairly among all taxpayers while efficiency ensures that the economy is not weighed down by tax inefficiencies. A tax system that achieves both equity and efficiency is desirable.

Quiz 12: The Design of the Tax System

Citizens expect the government to provide various goods and services making taxes

​The largest source of federal revenue in the United States is:

Which of the following statements is correct?

The largest source of federal revenue in the United States is: