One of the issues that is debated in virtually every election is whether to raise the federal minimum wage, which stood at S7.25 per hour in 2015. Suppose that you are married with a child, working a 40-hour week in a minimum wage job. Assume that you pay taxes of about 10 percent of your total pay and that you work an average of 8 hours per day, 20 days each month. Your take-home pay (after taxes) is $ a month. (Enter your response as an integer.)

One of the issues that is debated in virtually every election is whether to raise the federal minimum wage, which stood at S7.25 per hour in 2015. Suppose that you are married with a child, working a 40-hour week in a minimum wage job. Assume that you pay taxes of about 10 percent of your total pay and that you work an average of 8 hours per day, 20 days each month. Your take-home pay (after taxes) is $ a month. (Enter your response as an integer.)

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Design Of The Tax System

Section: Chapter Questions

Problem 4PA

See similar textbooks

Similar questions

Why is a living wage considered a price floor? Does imposing a living wage have the same outcome as a minimum wage?
1. The payroll tax for unemployment insurance in a certain nation taxes all wages up to a maximum per worker of $30,000 at a 5 percent flat rate. What are the marginal and average tax rates on the wages for each of the following three workers? a. A restaurant worker with annual wages of $18,000.b. An assistant bank manager with wages of $35,000 per year. c. A corporate CEO with an annual salary of $500,000.
The figure below displays a market for teenage labor with a minimum wage of $6 per hour How many workers are unemployed at the $6 minimum wage? LS-LD. 30 (=70-40) The government places an hourly tax of $1 per worker on employers. Show the effect of the tax on the demand for labor. With both minimum wage and the labor tax, how many workers do firm employ? What is the incremental effect of the tax on employment? With both minimum wage and the labor tax, how many workers are unemployed? What is the incremental effect of the tax on unemployment?
2. For 2021, the wage base limit for Social Security taxes increased to $142,800, meaning that wage/salary income above $142,800 is not taxed for Social Security. That means up to $8,853 can be withheld from your paycheck for Social Security taxes for the year, but not more, regardless of how much you earn. The payroll tax for the Social Security program is 12.4%. One reform idea is to remove the wage base limit so all wage/salary income is subject to the 12.4% payroll tax for Social Security. a. Now that you have some expertise in public finance, please provide policy advice on this reform proposal. Describe the benefits and drawbacks of adopting this proposal. b. What are the implications for behaviors, such as employment, work hours, retirement decisions, etc.? c. Draw a graph to describe the reform and a behavioral change. Explain it.
Suppose that your state raises its sales tax from5 percent to 6 percent The state revenue commissionerlo~asts a 20 percent increase in sales tax revenue.Is this plausible? Explain.
Both a payroll tax and an excise tax on alcoholraise revenue and, respectively, shrink the marketsfor labor and alcohol. Although both have somefunctions in common, governments may havedifferent goals when levying them. What goalsdo you think motivate a payroll tax? What goalsmotivate an alcohol tax?
Suppose George made $20,000 last year and that he lives in the country of Harmony. The way Harmony levies income taxes, each citizen must pay 10 percent in taxes on their first $10,000 in earnings and then 50 percent in taxes on anything else they might earn. So given that George earned $20,000 last year, his marginal tax rate on the last dollar he earns will be __________ and his average tax rate for his entire income will be _________________. a. 50 percent; 50 percent. b. 50 percent; less than 50 percent. c. 10 percent; 50 percent. d. 10 percent; less than 50 percent.
Consider a labor market in which workers are paid the minimum wage. When will it matter for tax incidence whether a payroll tax is imposed on workers or on employers? A.Normally, the statutory imposition of a tax is irrelevant to the actual economic incidence because the party on whom legal liability rests will shift the burden if it can, and the less-elastic party will bear most of the burden of the tax. However, a tax imposed on employers can be shifted to workers earning the minimum wage; employers are not legally constrained from lowering wages further, so they will not bear the full burden. On the other hand, a tax imposed on workers will not be at least partially shifted to employers if the demand for labor is inelastic. Therefore, minimum-wage employers with elastic demand for labor are likely to share some of the burden of a tax imposed on employees. B.Normally, the statutory imposition of a tax is relevant to the actual economic incidence because the party on whom legal…
Calculating tax incidence Suppose that the local government of Jacksonville decides to institute a tax on soda producers. Before the tax, 40 billion liters of soda were sold every year at a price of $10 per liter. After the tax, 33 billion liters of soda are sold every year; consumers pay $12 per liter, and producers receive $7 per liter (after paying the tax). The amount of the tax on a liter of soda is per liter. Of this amount, the burden that falls on consumers is per liter, and the burden that falls on producers is per liter. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been
Match the term with the definition:[?] is the rate you pay on the last dollars you earned A. Average tax rate[?] is the overall rate you pay on your entire income B. Marginal tax rate
2 Explain Nozick's argument that taxation is forced labor. Do you find the argument convincing? Why or why not?
Suppose you are a typical person in the U.S. economy. You pay 4 percent of yourincome in a state income tax and 15.3 percent of your labor earnings in federal payrolltaxes (employer and employee shares combined). You also pay federal income taxes asin Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking alltaxes into account, what are your average and marginal tax rates? What happens toyour tax bill and to your average and marginal tax rates if your income rises to$60,000?