Question 1

The individual income tax, the inheritance tax, and the head tax are all examples of direct taxes.

Accepted Answer

Direct taxes are taxes that are imposed on individuals and businesses directly, such as income tax, inheritance tax, and head tax.

Question 2

Since the early 1970s, state and local taxes have remained relatively constant as a percentage of GDP.

Accepted Answer

According to data from the U.S. Bureau of Economic Analysis, state and local taxes as a percentage of GDP have fluctuated slightly over the past few decades but generally remained relatively constant since the early 1970s.

Question 3

A progressive tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Accepted Answer

This is the definition of a progressive tax.

Question 4

The share of GDP taken by taxes is considerably higher in the United States than in other countries.

Accepted Answer

The share of GDP taken by taxes is actually lower in the United States compared to other developed countries such as Denmark, France and Sweden.

Question 5

The marginal tax rate has less effect on economic incentives than does the average tax rate.

Accepted Answer

The answer of The marginal tax rate has less effect...

Question 6

The federal government receives most of its revenue from three sources: personal income tax, corporate income tax, and payroll tax.

Accepted Answer

According to the Congressional Budget Office, in 2019 the federal government received 49% of its revenue from individual income taxes, 10% from corporate income taxes, and 36% from payroll taxes.

Question 7

Direct taxes are levied on specific economic activities.

Accepted Answer

Direct taxes are taxes that are levied directly on individuals or entities. They are generally not tied to specific economic activities. Examples of direct taxes include income tax, property tax, and estate tax. Indirect taxes, on the other hand, are levied on specific economic activities, such as sales tax or excise tax.

Question 8

The federal government of the United States relies heavily on value-added taxes.

Accepted Answer

The federal government of the United States does not rely on value-added taxes. Instead, it primarily relies on income taxes and payroll taxes. Some states have implemented their own value-added taxes, but there is no federal-level VAT in the US.

Question 9

The head tax is regressive.

Accepted Answer

The head tax is a flat tax that is the same for everyone regardless of income level, which makes it regressive. Low-income individuals pay the same amount as high-income individuals, which means the tax burden falls disproportionately on those with lower incomes.

Question 10

Since the early 1950s, federal taxes have remained relatively constant as a percentage of GDP.

Accepted Answer

According to data from the Office of Management and Budget, federal taxes as a percentage of GDP have fluctuated between 15-20% since the early 1950s, with no significant long-term trend upwards or downwards.

Question 11

When the average tax rate rises as income rises, this is known as progressive taxation.

Accepted Answer

Progressive taxation means that as income increases, the tax rate also increases, resulting in higher taxes for those with higher incomes.

Question 12

Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Accepted Answer

Indirect taxes are those that are imposed on goods and services rather than on individuals or businesses. Sales taxes, property taxes, and value-added taxes are examples of indirect taxes.

Question 13

Tax loopholes are equally available to all taxpayers.

Accepted Answer

Tax loopholes are often utilized by wealthy individuals and corporations who can afford to hire expensive tax advisors and lawyers to find and exploit these loopholes. This creates an unequal playing field and advantages those who can afford to take advantage of the loopholes.

Question 14

A regressive tax is one in which the average tax rate falls as income rises.

Accepted Answer

A regressive tax system is characterized by a decrease in the average tax rate as the taxpayer's income increases, meaning that lower-income individuals pay a higher proportion of their income in taxes compared to higher-income individuals.

Question 15

Homeowners receive tax benefits that are not available to renters.

Accepted Answer

Homeowners are able to deduct mortgage interest and property taxes on their income taxes, which can result in lower tax liability. Renters do not have this opportunity.

Question 16

A proportional tax is one in which the fraction of income paid in taxes rises as a person's income increases.

Accepted Answer

A proportional tax is one in which the tax rate is constant, meaning the fraction of income paid in taxes remains the same regardless of a person's income level.

Question 17

The share of GDP taken by taxes has increased dramatically since the 1960s.

Accepted Answer

The answer of The share of GDP taken by taxes...

Question 18

Indirect taxes are levied on specific economic activities.

Accepted Answer

Indirect taxes are taxes levied on specific economic activities, such as sales tax on goods and services, excise tax on specific goods like tobacco and fuel, and value-added tax (VAT) on the value added at each stage of production and distribution.

Question 19

Existing loopholes erode the progressivity of the U.S.tax system.

Accepted Answer

Loopholes in the tax system allow certain individuals or corporations to avoid paying their fair share of taxes, which reduces the progressivity of the system. This means that those with higher incomes or more wealth are not being taxed at a higher rate, which can exacerbate income inequality.

Question 20

Direct taxes are levied directly on people or corporations.

Accepted Answer

Direct taxes are levied directly on people or corporations, such as income tax or corporate tax.

Quiz 18: Taxation and Resource Allocation