Fill-in-the-Blank
1. Fill in the blanks to make the following statements correct.
a. Suppose you earn an annual income of $22 500 and you
paid a total of $3600 in taxes. Your average tax rate is
.
b. Suppose you earn an annual income of $22 500 and each
dollar earned is taxed at the same rate. Your marginal tax
rate is the same as your.
c. Suppose the marginal tax rate on the first $25 000 of
income is 20 percent, and on any income above that, the
rate rises to 30 percent. If your annual income is $42 000,
you will pay total income tax of.
d. Lower-income groups typically spend a higher proportion
of their income than do higher-income groups. For this
reason, excise and sales taxes are considered to be
somewhat.
e. The most important source of revenue for municipalities
is the tax. Rather than being a tax on income or
expenditure, it is a tax on.
2. Fill in the blanks to make the following statements correct.
a. Evaluating a tax system requires consideration of the
following two aspects of taxation: and
b. Taxation usually causes allocative inefficiency because it
distorts the equality between marginal and