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: Cengage Learning
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Question
Chapter 15, Problem 9CQ
To determine
Impact of tax on employment and measures to reduce personal effect of tax.
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Why might one person work more, earn more, and pay more income tax when his or her tax rate is cut, while another person will work less, earn less, and pay less income tax under the same circumstance?
What consumption differences might you expect to observe between families characterized as underprivileged versus those whose income is average for its social class? Do you have a tendency to overestimate the class you are in? If so, why? If not, 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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Similar questions
- Use the information above to help answer these last two questions Would this transfer increase, decrease, or have no effect on income inequality in this group? Redistributing income from the highest earner to the lowest one would reduce the utility of the top earner and increase the utility of the lowest earner. But what would happen to overall utility in the economy? Would it increase, decrease, or remain the same? Explain your answer. (Hint: does the marginal utility of income diminish as one earns more?)arrow_forwardHow do factor endowments affect personal income? Examine different provisions employed by the government in dealing with inequality in the distribution of income.arrow_forwardExplain why a lump-sum government transfer can entice some workers to stop working (and entices no one to start working) while the earned income tax credit can entice some people who otherwise would not work to start working (and entices no one to stop working).arrow_forward
- Suppose in Fiscalville there is no tax on the first $10,000 of income, but a 20 percent tax on earnings between $10,001 and $20,000 and a 30 percent tax on income between $20,001 and $30,000. Any income above $30,000 is taxed at 40 percent. If your income is $50,000, how much will you pay in taxes? Determine your marginal and average tax rates. Is this a progressive tax? Explain.arrow_forwardWhen the ________ interest rate is low, there are greater incentives to ________ and fewer incentives to ________. Fill itarrow_forwardShould the government do more to reduce income inequality? If so, what? If not, why not? Would reducing inequality have any benefits for society in general? Specifically, would reducing inequality benefit middle class and upper class households? If so, how? Do you think it likely that attempts to reduce income inequality would reduce people's incentives to work? Why or why not?arrow_forward
- What do you think about the income trap - is it a myth or reality? How does the middle-income trap affect the equality and poverty of citizens? What can be done to avoid or escape from the trap? Answer correctly and explain within 40 mins will give you positive feedback.arrow_forwardTo combat income inequality and to generate increased tax revenues to fund expenditures, government officials decide to aggressively increase how progressive income taxes are, so much so that the top income earners are marginally taxed 90% of their income (and while this marginal tax rate may seem oppressive, these top income earners still have more than enough income to satisfy all of their needs and all but the most extravagant of wants - basically, these earners have more than enough money). Argue why this tax policy is a fair approach to fund government expenditures. Why might this tax policy fail to achieve its objectives (tax revenues would actually decline as a result)?arrow_forward
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