Which of the following is true in the United States? O A. Only state governments can collect taxes. O B. Local governments cannot collect taxes. OC. The central and local governments collect taxes. D. Only the federal government can collect taxes.
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- Suppose that the government imposes a tax on heating oil.Would the deadweight loss of this tax likely be greater in the first year after it is imposed or in the fifth year? Would the tax revenue collected from this tax likely be greater in the first year after it is imposed or in the fifth year? A. The deadweight loss and tax revenue would both be greater in the first year than the fifth. B. The deadweight loss would be greater in the first year than the fifth, but the tax revenue would be greater in the fifth year than the first. C. The deadweight loss would be greater in the fifth year than the first, but the tax revenue would be greater in the first year than the fifth. D. The deadweight loss and tax revenue would both be greater in the fifth year.Suppose that the government decides to charge cola consumers an excise tax. Before the tax, 12 million cases of cola are sold every month at a price of $3.50 per case. After the tax, 6million cases of cola are sold every month; consumers pay $4.00 per case and producers receive $2.00 per case. a. What is the excise tax on cola?b. On whom does the incidence of the tax fall more heavily?c. How much government revenue will be generated by the excise tax?Suppose that your state raises its sales tax from5 percent to 6 percent The state revenue commissionerlo~asts a 20 percent increase in sales tax revenue.Is this plausible? Explain.
- After the excise tax is imposed, what is the new equilibrium quantity of sofas? d. What is the total amount of revenue collected by the government from the excise tax on sofas?What is the relative importance of taxation to the economy of the country? Discuss clearly the importance.Suppose the demand for cigarettes is Q = 15 - 0.5Pand the supply of cigarettes is Q = P - 3, where P is the price per pack of cigarettes. Suppose the government imposes a cigarette tax of $3 per pack. (a) What is the price paid by producers and price faced by consumers? (b) What is the government revenue from the tax and What is the total dollar amount of tax revenue that is ultimately paid by consumers (i.e. consumers' tax burden)? (c) What is the excess burden of the tax?
- Calculating tax incidence Suppose that the local government of Jacksonville decides to institute a tax on soda producers. Before the tax, 40 billion liters of soda were sold every year at a price of $10 per liter. After the tax, 33 billion liters of soda are sold every year; consumers pay $12 per liter, and producers receive $7 per liter (after paying the tax). The amount of the tax on a liter of soda is per liter. Of this amount, the burden that falls on consumers is per liter, and the burden that falls on producers is per liter. True or False: The effect of the tax on the quantity sold would have been larger if the tax had beenAnswer all the questions! 1. What has been the relationship over the past century between the U.S. economy’s income and the percentage of that income that the government collects in revenues? 2. What are the characteristic(s) of an efficient tax system?Suppose George made $20,000 last year and that he lives in the country of Harmony. The way Harmony levies income taxes, each citizen must pay 10 percent in taxes on their first $10,000 in earnings and then 50 percent in taxes on anything else they might earn. So given that George earned $20,000 last year, his marginal tax rate on the last dollar he earns will be __________ and his average tax rate for his entire income will be _________________. a. 50 percent; 50 percent. b. 50 percent; less than 50 percent. c. 10 percent; 50 percent. d. 10 percent; less than 50 percent.
- Assume that the federal government replaces the federal income tax with a national sales tax on all consumption expenditures. Analyze the impact of this tax change on taxation efficiency and equity? Note that the federal government already collects a nationwide consumption tax through excise taxes on gasoline, liquor and tobacco.Suppose you are a typical person in the U.S. economy. You pay 4 percent of yourincome in a state income tax and 15.3 percent of your labor earnings in federal payrolltaxes (employer and employee shares combined). You also pay federal income taxes asin Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking alltaxes into account, what are your average and marginal tax rates? What happens toyour tax bill and to your average and marginal tax rates if your income rises to$60,000?Taxation Suppose the federal government requires beer drinkers to pay a $2 tax on each case of beer purchased. (a) Draw a supply-and-demand diagram of the market for beer without the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? (b) Now draw a supply-and-demand diagram for the beer market with the tax. Show the price paid by consumers, the price received by producers, and the quantity of beer sold. What is the difference between the price paid by consumers and the price received by producers? Has the quantity of beer sold increased or decreased? (c) Can you identify any government revenues? (d) Is there any inefficiency, and if so, can you define it and label it on the graph? (e) If the producer has an inelastic supply curve, which market participant has the bigger tax burden? Explain.