Microeconomics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453569
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 15, Problem 9CQ
To determine
Impact of tax on employment and measures to reduce personal effect of tax.
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Suppose you earned $60,000 per year and pay taxes based on marginal tax rates. The first tax bracket which taxes at 10% ranges from zero dollars to $30,000. The second tax bracket which tax at 25% ranges from 30,001 to $120,000. How much will you pay in total taxes?
Keep in mind that you don’t have to die to have to pay inheritance and gift taxes under the current tax code. Anyone who gives a family member more than $11.5 million (as of 2020 indexed annually for inflation) is subject to the tax. Is that amount too high or too low, and why?
What impact does taxes have on the state of employment and the workforce? Are they beneficial or a hindrance to growth in employment?
If taxes were lower, how could business differently?
What do you think would happen if there were no taxes and one could spend all the money earned on capital and employee wages?
Chapter 15 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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- You decide to work part-time at a local clothing store. The job pays $8.50 per hour and you work 16 hours per week. Your employer withholds 10% of your gross pay for federal taxes, 5.65% for FICA taxes, and 4% for state taxes. What is your weekly gross pay? How much is withheld per week for federal taxes? How much is withheld per week for FICA taxes?arrow_forwardWhat do you think would happen if there were no taxes and you could spend all your money on capital and employee wages?arrow_forwardWhere do most people's largest portion of their personal income comes from?arrow_forward
- how to find the 90/10 income ratio?arrow_forwardyou have $84.25. you get additional money for mowing lawns. then you purchase a new pair of shoes for $75.49 and $63.76 left. how much money do you earn mowing lawns?arrow_forwardYour paycheck for the year is higher this year than last year. Does that mean that your real income has increased.arrow_forward
- Please answer all the highlighted blanksarrow_forwardConsider by $150. The average citizen there spends 90% of each additional dollar of income earned. a government that raises taxes Calculate the total change in income (Y) that will result. Carefully follow all numeric directions. Use a negative number to indicate a decrease in Y and a positive number to indicate an increase.arrow_forwardSusan is a single mother with three children. She is a cashier at a food market earning $7.75 per hour and works up to 2,000 hours per year. She is eligible for government benefits, so if she does not earn any income, she will receive a total of $17,050 per year. She can work and still receive government benefits, but for every $1 of income, her government stipend is $1 less. The government has decided to change the benefits policy of every $1 of income earned to reduce the government’s stipend by 60 cents. How will this change Susan's benefits received? What are her new choices? Complete the Revised Poverty Trap Table to present Susan’s options and provide answers to the following: What are the advantages of Susan working? What are the disadvantages of Susan working? What are the advantages of Susan receiving government benefits? What are the disadvantages of Susan receiving government benefits? Based on your findings from the Poverty Trap Table, should Susan continue to work or…arrow_forward
- What is the difference between in-kind and cash transfers? Winch might increase the utility of the recipients the most? Why is there political resistance to the negative income tax?arrow_forwardWhat makes the Earned Income Tax Credit (EITC) different from other poverty-fighting programs? The amount of the credit is doubled if the head of household is attending college. The tax credit is phased out gradually, rather than at a specific income cutoff point. The amount of the credit is not determined by the number of dependent children in the household. The EITC doesn't require the recipient to pay a minimum amount of income tax in order to receive the credit. It creates less of an incentive to work than other programs.arrow_forwardCalculate Social Security taxes, Medicare taxes, and FIT for Jordon Barrett. He earns a monthly salary of $11,900. He is single. Before this payroll, Barrett's cumulative earnings were $142,100. (Social Security maximum is 6.2% on $142,800 and Medicare is 1.45%.) Calculate FIT by the percentage method. (Use Table 9.1) Note: Round your answers to 2 decimal places. FIT Social Security taxes $ 737.80 Medicare taxes $ 172.55arrow_forward
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