8. Tax evasion would be less of a problem if tax rates were lowered. 9. The user charge for a congestible public good should be zero at all times.
10. Zero prices for price-excludable government services provide benefits only to the poor.
11. The gasoline tax is an example of a general tax on consumption.
12. For a proportional tax, the marginal tax rate is always equal to the average tax rate.
13. Tax avoidance is an illegal activity in the United States. 14. An increase in marginal tax rates is likely to increase tax evasion.
15. Most studies indicate that state-run lotteries are equivalent to a progressive tax on gambling.
16. Government activity requires the reallocation of resources from government to private use.
17. A flat income tax( i. e. a fixed amount paid by every taxpayer) is an example of a selective tax.
18. The average tax rate and marginal tax rate are the same under a progressive tax rate structure.
Multiple Choice Questions 1. According to the benefit principle, a. taxes should be distributed according to ability to pay. b. user charges are an ideal source of finance for government goods and services.
c. the progressive income tax represents the ideal way of distributing taxes among citizens.
d. flat-rate taxes are always the best kind. 2. If horizontal equity is achieved in taxation, a. vertical equity will also be achieved. b. individuals of equal economic capacity will pay equal taxes.