Chapter 12 The Design of the Tax SystemTRUE/FALSE1.The average American pays a higher percent of his income in taxes today than he would have in the late 18th century.ANS:TDIF:1REF:12-0NAT:AnalyticLOC:The role of governmentTOP:Tax burdenMSC:Applicative2.The U.S. tax burden is high compared to many European countries, but is low compared to many other nations in the world.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Tax burdenMSC:Applicative3.Poor countries such as India and Pakistan usually have low tax burdens.ANS:TDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Tax burdenMSC:Applicative4.The U.S. federal government collects about one-half of the taxes in our economy.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Tax burdenMSC:Applicative5.Individual income taxes and social insurance taxes generate the highest tax revenue for the federal government.ANS:TDIF:2REF:12-1NAT:AnalyticLOC:The role of governmentTOP:TaxesMSC:Applicative6.Individual income taxes generate rougly 25% of the tax revenue for the federal government.ANS:FDIF:2REF:12-1NAT:AnalyticLOC:The role of governmentTOP:TaxesMSC:Applicative7.Income taxes and property taxes generate the highest tax revenue for state and local governments.ANS:FDIF:2REF:12-1NAT:AnalyticLOC:The role of governmentTOP:TaxesMSC:Applicative8.Sales taxes generate nearly 50% of the tax revenue for state and local governments.ANS:FDIF:2REF:12-1NAT:AnalyticLOC:The role of governmentTOP:TaxesMSC:Applicative9.Some states do not have a state income tax.ANS:TDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Income taxesMSC:Applicative10.By law, all states must have a state income tax.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Income taxesMSC:Applicative11.Social Security is an income support program, designed primarily to maintain the living standards of the poor.ANS:FDIF:2REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Government spendingMSC:Applicative12.A budget surplus occurs when government receipts fall short of government spending.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The study of economics, and definitions of economicsTOP:Budget surplusesMSC:Definitional13.A budget surplus occurs when government receipts exceed government spending.ANS:TDIF:1REF:12-1NAT:AnalyticLOC:The study of economics, and definitions of economicsTOP:Budget surplusesMSC:Definitional14.A budget deficit occurs when government receipts exceed government spending.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The study of economics, and definitions of economicsTOP:Budget deficitsMSC:Definitional15.A budget deficit occurs when government receipts fall short of government spending.ANS:TDIF:1REF:12-1NAT:AnalyticLOC:The study of economics, and definitions of economicsTOP:Budget deficitsMSC:Definitional16.As of 2005, the largest source of receipts for state and local governments was individual income taxes.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:TaxesMSC:Interpretive17.As of 2005, the largest source of receipts for state and local governments was corporate income taxes.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:TaxesMSC:Interpretive18.In the United States, all families pay the same proportion of their income in taxes.ANS:FDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Taxes | IncomeMSC:Interpretive19.One reason for the projected increase, over the next several decades, in government spending as a percentage of GDP is the projected increase in the size of the elderly population.ANS:TDIF:1REF:12-1NAT:AnalyticLOC:The role of governmentTOP:Government spendingMSC:Interpretive20.The administrative burden of any tax system is part of the inefficiency it creates.ANS:TDIF:1REF:12-2NAT:AnalyticLOC:Efficiency and equityTOP:TaxesMSC:Interpretive21.One characteristic of an efficient tax system is that it minimizes the costs associated with revenue collection.ANS:TDIF:2REF:12-2NAT:AnalyticLOC:Efficiency and equityTOP:TaxesMSC:Interpretive22.The administrative burden of complying with tax laws is a cost to the government but not to taxpayers.ANS:FDIF:2REF:12-2NAT:AnalyticLOC:Efficiency and equityTOP:TaxesMSC:Interpretive23.The equity of a tax system concerns whether the tax burden is distributed equally among the population.ANS:FDIF:2REF:12-2NAT:AnalyticLOC:Efficiency and equityTOP:TaxesMSC:Interpretive24.An efficient tax system is one that imposes small deadweight losses and small administrative burdens.ANS:TDIF:2REF:12-2NAT:AnalyticLOC:Efficiency and equityTOP: