Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 12, Problem 4PA
Subpart (a):
To determine
Reason for taxing only realized capital gains .
Subpart (b):
To determine
Reason for taxing only realized capital gains.
Subpart (c):
To determine
Reason for taxing only realized capital gains.
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Use information from paragraph 4 to answer the following question.
Before the Progressive Era, many taxes had been based on property. But many wealthy people hid such property as stocks and bonds from the
govemment and did not pay taxes on them. Largely for this reason, progressives demanded that taxes be based on income rather than on property. In
1911, Wisconsin passed the first effective state income tax law. Two years later, Congress enacted what became the first permanent federal income tax in
the United States.
Which conclusion about taxation during the Progressive Era is best supported by the text?
O Progressives demanded that taxes be based on income rather than on property.
O Property taxes included ownership of stocks and bonds, which are inescapable today.
O Property taxes were an ineffective means for the government to collect the money it needed to operate.
O Progressives managed to pass the first state income tax, which was two years before the federal law was passed.
7
8…
Choose the letter of the correct answer.
1. This kind of tax is derived from the individuals, corporate estates, and trusts income.
A. Donors tax
B. Capital gains tax
C. Income tax
D. Estate tax
2. This is a kind of tax on the rights of the decreased person to transmit his/ her estate to lawful heirs and beneficiaries at the time of death.
A. Donors tax
B. Capital gains tax
C. Income tax
D. Estate tax
3. This is a tax levied on gifts and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer.
A. Estate tax
B. Capital gains tax
C. Income tax
D. Donor Tax
4. A tax imposed on loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation.
A. Documentary tax
B. Capital gains tax
C. Income tax
D. Estate tax
5. A tax levied on the assessed value of land and permanently attached improvements owned by individuals or corporations.
A. Property tax
B. Capital gains tax
C. Income tax…
When someone owns an asset (such as a share ofstock) that rises in value, he has an “accrued” capitalgain. If he sells the asset, he “realizes” the gains thathave previously accrued. Under the U.S. income taxsystem, realized capital gains are taxed, but accruedgains are not.a. Explain how individuals’ behavior is affected bythis rule.b. Some economists believe that cuts in capital gainstax rates, especially temporary ones, can raise taxrevenue. How might this be so?c. Do you think it is a good rule to tax realizedbut not accrued capital gains? Why orwhy not?
Chapter 12 Solutions
Principles of Microeconomics (MindTap Course List)
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- The FICA tax is levied on employers, employees, and certain self-employed individuals. Revenue goes to Social Security and Medicare. In 2014, the employee's contribution to the retirement part of the FICA tax was 6.2 percent of the first $117,000 earned in wages and salaries. (Medicare is withheld on all wages and tips.) People with income from interest and dividend payments do not have to pay any Social Security tax on this income. What is the tax structure for the income tax over the income range of $0 to $117,000? O Proportional Tax O Progressive Tax Regressive Taxarrow_forwardWhich of the following is not an example of excise tax? * A. Transfer tax B. Sales tax C. Real property tax D. Income taxarrow_forwardThe country of Aquilonia has a tax system identical to that of Canada. Suppose an Aquilonian bought a parcel of land for $10,000 in 1960 when the price index equalled 100. In 2019, the person sold the land for $100,000, and the price index equalled 500. If the person must pay 20 percent of any capital gain in taxes, what is the after-tax real capital gain (in 2019 dollars) on the land? a. $72,000 b. $32,000 c. $6400 d. $62,000arrow_forward
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