Question

6 Which of the following statements is a true statement relating to Tax Policy Analysis) a. Administration and ease of compliance are not taken into account in the development of a tax structure.
b. The only way to legally avoid a tax is to change your behavior.
c. Statutory and Economic Incidence are essentially the same thing.
d. All of the above statements are true.
7 Which of the following is a true statement regarding user fees?
a. They should operate as benefit taxes
b. They make the consumer face the true cost of their consumption
c. The greater the share of marginal benefits that accrue to the user, the more attractive user fee financing becomes
d. All of the above
8 Which of the following is a true statement regarding state-local government bonds,
a. General obligation bonds are less restrictive, with few limitations re. amount that can be issued
b. When issuing revenue back bonds, the revenues from all sources are pledge to pay the interest.
c. General obligation bonds require that the issuing government must use funds from any available source to pay the interest and repay the principal to the investors.
d None of the above are true.
9 The role of federal grants in the federal fiscal system is to
a. Correct for externalities
b. Redistribute resources
c. Substitute tax structures
d. All of the above
10. Which of the following most closely reflects the general rule for the tax analysis? a) If a tax is imposed on the consumption of cigarettes, the consumer can reduce their tax burden only by purchasing less cigarettes.
b) Earning less income in a high tax jurisdiction.
c) Moving to a jurisdiction which has a lower tax burden
d) All of the above

Answer 1

6. b. The only way to legally avoid a tax is to change your behavior.
Administration and ease of compliance are taken into account and Statutory and Economic Incidence are not essentially the same thing so only b is true.

7. d. All of the above
All the statements are true.

8. c. General obligation bonds require that the issuing government must use funds from any available source to pay the interest and repay the principal to the investors.
Such bonds requires that issuing government must use funds from any available source to pay the interest and repay the principal to the investors.

9. d. All of the above
Federal grants are used to correct for externalities, redistribute resources and substitute tax structures.

10. d) All of the above
All the statements are true regarding the general rule for the tax analysis.