Test Bank for Principles of Taxation for Business and Investment Planning 2025 Edition Evergreen Release by Sally Jones Chapter 11 - 18

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Chapter02 Pol l l




icy Standards for a Good Tax
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Truel/lFalselQuestions



1. Altaxlmeetslthelstandardloflsufficiencyliflitlisleasylforlpeopleltolpayltheltax.


True False


2. Thelfederallgovernmentlislnotlrequiredltolpaylinterestlonlthelnationalldebt.


True False


3. Alstaticlforecastloflthelrevenueleffectloflaltaxlratelchangelassumeslthatltheltaxlbaseldoeslnotlchange
.


True False


4. Aldynamiclforecastloflthelrevenueleffectloflaltaxlratelchangelassumeslthatltheltaxlbaseldoeslnotlchange
.


True False


5. ThelfederallSociallSecurityltaxlburdenlonlemployeeslhaslnotlincreasedlsincel1990lbecauseltheltaxlratelh
aslnotlincreasedlsincelthatlyear.


True False


6. IflStatelHlincreaseslitslsalesltaxlratelbyl1%,litslsalesltaxlrevenuelmustlalsolincreaselbyl1%.


True False




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7. ThelcityloflBernelrecentlylenactedlal10%ltaxlonlthelpriceloflalsubwaylticket.lConsequently,lMrs.lLaneln
owlwalksltolworklinsteadlofltakinglthelsubway.lHerlbehaviorlillustrateslthelsubstitutionleffectloflaltaxli
ncrease.


True False


8. JurisdictionlPlrecentlylincreasedlitslincomeltaxlrate.lAltaxpayerlwholreactsltolthelincreaselbylworki
nglharderltolearnlmorelincomelisldemonstratinglthelincomeleffectloflthelratelincrease.


True False


9. Accordingltolsupply-sideleconomicltheory,laldecreaselinltaxlrateslforlhigh-
incomelindividualslcouldlactuallylcauselanlincreaselinltaxlrevenue.


True False


10. Supply-
sideleconomicltheorylholdslthatlpeoplelwholbenefitlfromlaltaxlratelreductionlwilllspendltheirltaxlwindf
alllonlconsumptionlgoods.


True False


11. Stateluseltaxeslarelmorelconvenientlforlindividuallconsumerslthanlstatelsalesltaxes.


True False


12. ThelInternallRevenuelService'slcostloflcollectingl$100lofltaxlrevenuelislaboutl$3.


True False


13. Alconvenientltaxlhasllowlcompliancelcostslforltaxpayerslandllowlcollectionlandlenforcementlcostslforlth
elgovernment.


True False




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HilllEducation.lAlllrightslreserved.lNolreproductionlorldistributionlwithoutlthelpriorlwrittenlconsentlofl McGraw-HilllEducation.
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14. Accordingltolthelclassicallconceptloflefficiency,lanlefficientltaxlshouldlbelneutrallinlitsleffectlonlfreelm
arketlallocationslofleconomiclresources.


True False


15. AccordingltolthelKeynesianlconceptloflefficiency,lanlefficientltaxlshouldlbelneutrallinlitsleffectlonlfreelm
arketlallocationslofleconomiclresources.


True False


16. Altaxlmeetslthelstandardloflefficiencyliflitlgenerateslenoughlrevenueltolpaylforlthelpubliclgoodslandlse
rviceslprovidedlbylthelgovernment.


True False


17. Alprovisionlinltheltaxllawldesignedltolencouragelalspecificleconomiclbehaviorlislaltaxl preference.


True False


18. Algoodltaxlshouldlresultlinleitherlhorizontallorlverticallequitylacrossltaxpayers.


True False


19. Changeslinltheltaxllawlintendedltolmakelthelmeasurementlofltaxablelincomelmorelpreciselusuallylmakel
theltaxllawllesslcomplex.


True False


20. Verticallequitylfocuseslonlmeasurementlofltheltaxlbase,landlhorizontallequitylfocuseslonltheltaxlratelst
ructure.


True False


21. Taxlsystemslwithlregressivelratelstructureslresultlinlalproportionallylheavierltaxlburdenlonlpersonslwithls
mallerltaxlbases.


True False




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ment Planning 2016 19th Edition Jones
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22. Alprogressivelratelstructurelandlalproportionatelratelstructurelbothlresultlinlverticallequitylacrossltaxpa
yers.


True False


23. ThelU.S.lindividuallincomeltaxlhaslalwayslusedlalprogressivelratelstructure.


True False


24. Theldeclininglmarginallutilityloflincomelacrosslindividualslcanlbelmeasuredlempirically.


True False


25. Taxlliabilityldividedlbyltaxablelincomelequalslmarginalltaxlrate.


True False


26. Iflaltaxlhaslalproportionatelratelstructure,laltaxpayer'slmarginallratelandlaveragelratelarelequal.


True False


27. Iflaltaxlhaslalprogressivelratelstructure,laltaxpayer'slaveragelratelislgreaterlthanlherlmarginallrate.


True False


28. Theltheorylofldistributionalljusticelislalrationalelforlalprogressivelincomeltaxlsystem.


True False


29. Individualslwholbelievelthatlaltaxlsystemlislfairlarellessllikelyltolcheatlonltheirltaxeslthanlindivid
ualslwholbelievelthatlthelsystemlislunfair.


True False


30. Manyltaxpayerslbelievelthelincomeltaxlsystemlislunfairlbecauselitlislsolcomplicated.


True False




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HilllEducation.lAlllrightslreserved.lNolreproductionlorldistributionlwithoutlthelpriorlwrittenlconsentlofl McGraw-HilllEducation.
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