Chapter 20: Taxes on Wealth and Property
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
1) Statistics Canada estimated that the top 10 percent of wealth holders owned of wealth in Canada in
2012. 1)
A) 71 percent B) 48 percent C) 99 percent D) 10 percent
2) Taxes on have not been used in Canada. 2)
A) wages B) real property C) net wealth D) capital
3) An example of a stock variable is 3)
A) sales. B) consumption. C) income. D) wealth.
4)
The assessed value of a home is 4)
A) always lower than its market value.
B) the annual rate of deprecation of a home because of use.
C) the value that the jurisdiction uses to assign taxes.
D) an annual 6% increase in the value of a home.
5) The assessment ratio is 5)
A) always lower than the market ratio.
B)the sale value at death to the market value.
C) the tax liability to the tax rate.
D) the ratio of assessed value to market value.
6) In the traditional view, the supply curve of structures is 6)
A) perfectly vertical. B) downward sloping.
C) upward sloping. D) perfectly horizontal.
7) In the traditional view, the property tax that falls on structures shifts the entire burden to the 7)
A) bank. B) tenants. C) government. D) landowners.
8) The new view is that property tax is a(n) 8)
A) excise tax on land and structures. B) capital tax.
C) uniform tax. D) user fee.
9) The traditional view is that property tax is a(n) 9)
A) excise tax on land and structures. B) user fee.
C) uniform tax. D) capital tax.
10) Property tax as a user fee implies that 10)
A) the burden is borne by landowners.
B) the property tax creates no excess burden.
C) the burden is borne by owners of capital.
D) tax revenue is zero.
11) The property tax receives criticism because 11)
A) it is perceived as regressive. B) it is levied on an estimated value.
C) it is highly visible. D) all of these answers are correct.
, 12) In the traditional view, evidence suggests the structures part of the property tax is probably 12)
A)progressive. B) regressive.
C) neither regressive nor progressive. D) zero.
13) In the new view, the general effect of the tax is to lower the return to capital, which tends to be regressive in
its impact on the income distribution. 13)
A) True B) False C) Uncertain
14) The new view of the property tax uses a standard partial equilibrium framework. 14)
A) True B) False C) Uncertain
15) Property tax in Canada is predominately a provincial tax. 15)
A) True B) False C) Uncertain
16) There is no federal property tax in Canada. 16)
A) True B) False C) Uncertain
17) In the traditional view, the property tax on structures creates inefficiency by discouraging new construction
and repairs to the existing stock of buildings.17)
A) True B) False C) Uncertain
18) In the new view, assuming property tax can be approximated as a uniform tax, the burden falls entirely on
owners of capital. 18)
A) True B) False C) Uncertain
19) Assessment ratios differ systematically for different types of property. 19)
A) True B) False C) Uncertain
20) The three views of the property tax are not mutually exclusive alternatives; each may be valid in different
contexts. 20)
A) True B) False C) Uncertain
21) An estate tax reflects the market value of a property. 21)
A) True B) False C) Uncertain
22) In the traditional view, the burden of the property tax that falls on land that cannot be varied falls
completely on the landowner. 22)
A) True B) False C) Uncertain
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
23) Refer to the figure below. Suppose that the supply curve is constant at $10. Suppose further that the before-
tax demand curve DB can be written as B = 20 - P/2, where B is the number of structures per year and P is the
price.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
1) Statistics Canada estimated that the top 10 percent of wealth holders owned of wealth in Canada in
2012. 1)
A) 71 percent B) 48 percent C) 99 percent D) 10 percent
2) Taxes on have not been used in Canada. 2)
A) wages B) real property C) net wealth D) capital
3) An example of a stock variable is 3)
A) sales. B) consumption. C) income. D) wealth.
4)
The assessed value of a home is 4)
A) always lower than its market value.
B) the annual rate of deprecation of a home because of use.
C) the value that the jurisdiction uses to assign taxes.
D) an annual 6% increase in the value of a home.
5) The assessment ratio is 5)
A) always lower than the market ratio.
B)the sale value at death to the market value.
C) the tax liability to the tax rate.
D) the ratio of assessed value to market value.
6) In the traditional view, the supply curve of structures is 6)
A) perfectly vertical. B) downward sloping.
C) upward sloping. D) perfectly horizontal.
7) In the traditional view, the property tax that falls on structures shifts the entire burden to the 7)
A) bank. B) tenants. C) government. D) landowners.
8) The new view is that property tax is a(n) 8)
A) excise tax on land and structures. B) capital tax.
C) uniform tax. D) user fee.
9) The traditional view is that property tax is a(n) 9)
A) excise tax on land and structures. B) user fee.
C) uniform tax. D) capital tax.
10) Property tax as a user fee implies that 10)
A) the burden is borne by landowners.
B) the property tax creates no excess burden.
C) the burden is borne by owners of capital.
D) tax revenue is zero.
11) The property tax receives criticism because 11)
A) it is perceived as regressive. B) it is levied on an estimated value.
C) it is highly visible. D) all of these answers are correct.
, 12) In the traditional view, evidence suggests the structures part of the property tax is probably 12)
A)progressive. B) regressive.
C) neither regressive nor progressive. D) zero.
13) In the new view, the general effect of the tax is to lower the return to capital, which tends to be regressive in
its impact on the income distribution. 13)
A) True B) False C) Uncertain
14) The new view of the property tax uses a standard partial equilibrium framework. 14)
A) True B) False C) Uncertain
15) Property tax in Canada is predominately a provincial tax. 15)
A) True B) False C) Uncertain
16) There is no federal property tax in Canada. 16)
A) True B) False C) Uncertain
17) In the traditional view, the property tax on structures creates inefficiency by discouraging new construction
and repairs to the existing stock of buildings.17)
A) True B) False C) Uncertain
18) In the new view, assuming property tax can be approximated as a uniform tax, the burden falls entirely on
owners of capital. 18)
A) True B) False C) Uncertain
19) Assessment ratios differ systematically for different types of property. 19)
A) True B) False C) Uncertain
20) The three views of the property tax are not mutually exclusive alternatives; each may be valid in different
contexts. 20)
A) True B) False C) Uncertain
21) An estate tax reflects the market value of a property. 21)
A) True B) False C) Uncertain
22) In the traditional view, the burden of the property tax that falls on land that cannot be varied falls
completely on the landowner. 22)
A) True B) False C) Uncertain
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
23) Refer to the figure below. Suppose that the supply curve is constant at $10. Suppose further that the before-
tax demand curve DB can be written as B = 20 - P/2, where B is the number of structures per year and P is the
price.
