As part of Budget 2018, the Government of Canada introduced the Canada Workers Benefit (CWB) that will take affect starting on January 1, 2019. The CWB is a tax credit that supplements the earnings of low-income workers. For a single individual with no children, the structure of the CWB in 2023 is as follows. • No credit for earnings less than or equal to $3,000 • A 27% credit on each dollar of income earned over $3,000 up to a maximum of $1,428 • The maximum credit is reduced by 15% for each dollar eared above $23,495 Based on these parameters, please answer the following. (a) What is the "phase in" region for the CWB? In other words, what is the income range over which workers receive an increasing CWB subsidy? You may answer using a graph, an equation or using words. If you choose to characterize the phase-in region using words, then your answer must be very precise. (b) What is the "break even" level of earnings above which a single worker no longer receives a CWB subsidy?

As part of Budget 2018, the Government of Canada introduced the Canada Workers Benefit (CWB) that will take affect starting on January 1, 2019. The CWB is a tax credit that supplements the earnings of low-income workers. For a single individual with no children, the structure of the CWB in 2023 is as follows. • No credit for earnings less than or equal to $3,000 • A 27% credit on each dollar of income earned over $3,000 up to a maximum of $1,428 • The maximum credit is reduced by 15% for each dollar eared above $23,495 Based on these parameters, please answer the following. (a) What is the "phase in" region for the CWB? In other words, what is the income range over which workers receive an increasing CWB subsidy? You may answer using a graph, an equation or using words. If you choose to characterize the phase-in region using words, then your answer must be very precise. (b) What is the "break even" level of earnings above which a single worker no longer receives a CWB subsidy?

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter15: Income Inequality And Poverty

Section: Chapter Questions

Problem 7CQ

See similar textbooks

Similar questions

Family Flowers employs 17 people, of whom 14 earn gross pay of $640.00 each and 3 earn gross pay of $720.00 each on a weekly basis. What is the employer's share of total social security and Medicare taxes for the first quarter of the year? (Social security tax is 6.2% of wages up to $128,400. Medicare tax is 1.45% of all wages.)
Thomas is an employer with two employees, Patty and Selma. Patty’s wages are $12,450 and Selma’s wages are $1,275. The state unemployment tax rate is 5.4 per-cent. Calculate the following amounts for Thomas: a. FUTA tax before the state tax credit $__________________ b. State unemployment tax $____________________ c. FUTA tax after the state tax credit $________________
Impact of higher taxes on labor income from now to next 5 years.
A tax on labour income that does not eventually affect the number of labour hours supplied is non-distortionary. Do you agree or disagree with this statement. Explain
Suppose that the government introduces a welfare program in which any individual with an income of less than $42,350 per year receives a lump-sum transfer payment of $2,000 from the government. Assume that, in the short run, there is no change in labor-supply behavior among the people in Perkopia. In the year 2007, the poverty rate after the introduction of the welfare program in Perkopia is
Which statements are TRUE? 1. Factor substitution measures the degree of substitutability between factors of production in any given production. 2. The educational achievement of workers can bring about income equality but also income inequality. 3. The middle income trap is a measure of poverty that considers the deprivation of people in terms of health, education and standard of living of people. 4. The tax levied on goods and services which is finally borne by the end-consumer is known as indirect tax. 5. The GINI Coefficient relates the Lorenz Curve and the line of perfect quality of percentage of income and percentage of population. 6. Development process in the Philippines that is biased towards the urban areas is always justifiable from the perspective of Development Economics. 7. Up to this time, poverty is experienced more by women rather than men at the national and international level. 8. Free education is a means of reducing poverty among ethnic communities. 9.…
In terms of the Income Tax Act, which one of the following bodies is not exempt from income tax?(1) Non-resident companies.(2) Foreign banks who are not residents of the Republic.(3) Section 21 Companies approved by SARS.(4) Political party.(5) Any level of government in the Republic.
Consider an individual aged 64 who is eligible to collect full social security (public pension) benefits of $6,000 for a year. They have no other income but can work at a weekly wage rate of $600 for a maximum of 52 weeks. Receipt of benefits from the social security program is retirement tested. Specifically, the individual can earn up to $9,000 in annual wage income without a reduction in benefits; however, after $9,000 of earnings, benefits are reduced by 50% for every dollar earned, until the benefits are exhausted. a) Carefully draw and label the budget constraint for this individual. b) Suppose previously there was a retirement test, and then the test is eliminated, i.e., the individual now is allowed to keep all benefits, irrespective of their labour earnings. How would this affect the individual’s labour supply? Question Two David is a 70-year-old accountant. After serving his accounting firm for 45 years, David decides to retire soon. David has great passion for vintage cars…
A mandatory health insurance plan costs $4,000. One worker earns $24,000 in employment income and $500 in investment income. Another worker earns $48,000 in employment income and $2,000 in investment income. A third worker earns $68,000 in employment income and $7,000 in investment income. A premium-based system would cost each worker $4,000. A wage tax-based system would cost each worker 8.5 percent of wages. An income tax-based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income.
Assume that the government proposes a negative income tax that calculates taxes owed using the following formula: taxes owed = 0.25 Income $20,000. If a family earns an income of $60,000, how does this tax scheme affect them? they receive a subsidy of $5000 they pay $15,000 in taxes they pay $20,000 in taxes they receive an income subsidy of $15,000.
4.7) Consider a national income tax that is structured as follows: Income Marginal tax rate $0-$10,000 0% $10,001-- $60,000 5% $60,001and above 0% For each of the following workers determine his or her marginal and average tax rate. a. A part-time worker with an annual income of $9,000. b. A retail sales person with an annual income of $45,000. c. An advertising executive with an annual income of $600,000
12 Microeconomics focuses more on __________. a. Determination of employment b. Determination of price c. Determination of price level d. Determination of income