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 .