Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings. a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal. b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings. a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal. b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter7: Demand And Supply
Section7.1: Demand
Problem 5R
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Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings.
a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal.
b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
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