Question

MPQ: Different Types of Taxes

a. A progressive tax is one in which

• the average rate increases as income increases.

• the average rate decreases as income increases.

• the average rate is constant as income increases.

• more taxes are paid as income increases.

b. A regressive tax is one in which

• the average rate decreases as income increases.

• the average rate is constant as income increases.

• the same taxes are paid as income increases.

• the average rate increases as income increases.

c. A proportional tax is one in which

• the average rate decreases as income increases.

• the average rate is constant as income increases.

• the same amount of taxes are paid as income increases.

• the average rate increases as income increases.

d. The federal personal income tax is

• average, and the incident is on the consumer.

• proportional, and the incident is on the taxpayer.

• regressive, and the incident is on the taxpayer.

• progressive, and the incident is on the taxpayer.

e. A 4 percent state general sales tax is

• average, and the incident is on the consumer.

• proportional, and the incident is on the consumer.

• progressive, and the incident is on the taxpayer.

• regressive, and the incident is on the consumer.

f. A federal excise tax on automobile tires is

• progressive, and the incident is on the taxpayer.

• proportional, and the incident is on the consumer.

• average, and the incident is on the consumer.

• regressive, and the incident is on the consumer.

g. A municipal property tax on real estate is

• regressive, and the incident is on the consumer if the property is used in business.

• progressive, and the incident is on the taxpayer if the property is rented.

• proportional, and the incident is on the consumer if it is an owner-occupied residence or land.

• average, and the incident is on the consumer if one owns or rents.

h. The federal corporate income tax is

• proportional, if the incidence is on shareholders.

• regressive, if the incidence is on producers.

• progressive, if the incidence is on consumers.

• average, if the incidence is on shareholders.

i. The type of tax represented by the portion of the payroll tax levied on employers is

• regressive, if the incidence is on employees.

• proportional, if the incidence is on employers.

• progressive, if the incidence is on employers.

• difficult to determine without knowing the relative labor supply and demand elasticities.

Answer 1

a. the average rate increases as income increases.

b. the average rate decreases as income increases.

c. the average rate is constant as income increases.

d. progressive, and the incident is on the taxpayer

e. regressive, and the incident is on the consumer

f. regressive, and the incident is on the consumer.

g. regressive, and the incident is on the consumer if the property is used in business.

h. proportional, if the incidence is on shareholders.

i. difficult to determine without knowing the relative labor supply and demand elasticities.