Chapter12 - Chapter12 TheDesignoftheTaxSystem...

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Chapter 12 The Design of the Tax System MULTIPLE CHOICE 1. Which of the following statements is most correct? a. As a nation gets richer, the government has larger tax revenue, but typically takes a smaller share of income in taxes. b. Poor countries usually have relatively large tax burdens. c. As a nation gets richer, the government typically takes a larger share of income in taxes. d. There is little evidence of a relationship between income and taxes for most countries. ANSWER: c. As a nation gets richer, the government typically takes a larger share of income in taxes. TYPE: M SECTION: 1 DIFFICULTY: 2 2. In 1789 the average American paid what percent of his income in taxes? a. approximately 2 percent. b. approximately 5 percent. c. approximately 10 percent. d. approximately 25 percent. ANSWER: b. approximately 5 percent. TYPE: M SECTION: 1 DIFFICULTY: 1 3. Over the past 100 years, as the economy’s income has grown, a. tax rates, as a percentage of total income have fallen. b. tax revenues, as a percentage of total income have fallen. c. household after-tax income has fallen. d. the government has grown even more. ANSWER: d. the government has grown even more. TYPE: M SECTION: 1 DIFFICULTY: 2 4. Who said, ”in this world nothing is certain but death and taxes”? a. Mark Twain b. P.T. Barnum c. Ben Franklin d. Richard Nixon ANSWER: c. Ben Franklin TYPE: M SECTION: 1 DIFFICULTY: 1 5. The U.S. federal government collects taxes in a number of ways. Rank the following sources of revenue from largest to the  smallest. a. corporate income tax, social security tax, personal income tax, import tax b. estate tax, corporate income tax, excise tax, individual income tax c. corporate income tax, payroll tax, individual income tax, excise tax d. individual income tax, payroll tax, corporate income tax, excise tax ANSWER: d. individual income tax, payroll tax, corporate income tax, excise tax TYPE: M SECTION: 1 DIFFICULTY: 2 81
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82 Chapter 12/The Design of the Tax System 6. Rate these taxes to the Federal government from most to least important. a. individual income taxes, Social insurance taxes, Corporate income taxes b. Social insurance taxes, Corporate income taxes, individual income taxes c. Corporate income taxes, individual income taxes, Social insurance taxes d. Corporate income taxes, Social insurance taxes, individual income taxes ANSWER: a. individual income taxes, Social insurance taxes, Corporate income taxes TYPE: M SECTION: 1 DIFFICULTY: 2 7. Most people agree that the tax system a. should be both efficient and equitable. b.
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This note was uploaded on 10/22/2010 for the course BUSINESS BAIU09 taught by Professor Mr.ken during the Spring '10 term at American InterContinental University Dunwoody.

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Chapter12 - Chapter12 TheDesignoftheTaxSystem...

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