Federal payroll taxes to fund the EI program are levied at a combined rate of 1.58 percent up to an income ceiling of $54,200. a. If there was a limit on the income level at which these taxes apply, would they be proportional, progressive, or regressive? With no limit, are the taxes proportional, progressive, or regressive? b. The amount of EI benefits that people receive depends on the amount of payroll taxes they paid. Relative to people who had low earnings, people who had higher earnings and paid more 3 in taxes receive more benefits, but not proportionally more. Does this feature of the EI system make EI a progressive or a regressive payroll tax?
Federal payroll taxes to fund the EI program are levied at a combined rate of 1.58 percent up to an income ceiling of $54,200. a. If there was a limit on the income level at which these taxes apply, would they be proportional, progressive, or regressive? With no limit, are the taxes proportional, progressive, or regressive? b. The amount of EI benefits that people receive depends on the amount of payroll taxes they paid. Relative to people who had low earnings, people who had higher earnings and paid more 3 in taxes receive more benefits, but not proportionally more. Does this feature of the EI system make EI a progressive or a regressive payroll tax?
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter17: Taxation And Resource Allocation
Section: Chapter Questions
Problem 2DQ
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Federal payroll taxes to fund the EI program are levied at a combined rate of 1.58 percent up to an income ceiling of $54,200. a. If there was a limit on the income level at which these taxes apply, would they be proportional, progressive, or regressive? With no limit, are the taxes proportional, progressive, or regressive? b. The amount of EI benefits that people receive depends on the amount of payroll taxes they paid. Relative to people who had low earnings, people who had higher earnings and paid more 3 in taxes receive more benefits, but not proportionally more. Does this feature of the EI system make EI a progressive or a regressive payroll tax?
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