Economics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280595
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 17, Problem 2DQ
To determine
Comment the given situation regarding tax cuts.
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Does tax cuts reduce tax revenue?
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Economics: Principles and Policy (MindTap Course List)
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- Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?arrow_forwardIn 1989, Senator Bob Packwood asked Congress’s Joint Committee on Taxation how much extra revenue the government would raise if it just started taxing 100% of all income over $200,000 per year. The Joint Committee crunched some numbers and reported an answer: $204 billion per year. a. What is wrong with this answer? In 1989, very few people made over $200,000 a year, so the estimate of the tax revenue is far too high. Increasing government spending by $204 billion each year would have generated economic growth, and subsequently even higher amounts of tax revenues. The Joint Committee on Taxation did not have the tools needed to make such an estimate accurately. No one would have an incentive to work once they had earned $200,000, so much of the taxable income would disappear.arrow_forwardIf government increases spending and wants to maintain a balanced budget, it shouldarrow_forward
- Economist Arthur lagger famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?arrow_forward←05 Survey Junkie 17 Gmail C https:/Assign W 2 https://highschools.foolproofonline.info/modules/taxes/board13.php YouTube Maps Dashboard - HMH Ed Okay, more Practice Questions: This is: Identify the type of tax for each example. Example 1: You are charged this tax by the federal government on your yearly pay. O Income Tax. O Sales Tax. O Property Tax. O Excise Tax. This is: Example 2: You own a piece of property and receive a tax bill from the state each year. O Income Tax. O Sales Tax. O Property Tax. O Excise Tax. EN Anglais (ats-Unis) E $ 4 0.6.76 Edmen w foolpro Cc X R 5 T Y & 7 F9 8arrow_forwardWhich tax system impacts more on the rich people, and why does it impacts them more?arrow_forward
- What will an increase in the tax rate causearrow_forwardEXPLAIN THREE WAYS IN WHICH TAXATION AND GOVERNMENT SPENDING IMPACT THE ECONOMY POSITIVELY AND NEGATIVELY.arrow_forwardReagan campaigned for a phased 30 percent tax cut within the next three years in officeMost of the tax cuts focused on the lower -income and poverty levels . True or False?arrow_forward
- Why will direct taxes increase faster than per capita income?arrow_forwardWhy can Social Security and Medicare be fiscal time bombs?arrow_forwardFederal and local governments tax and spend. The following pie charts show the allocation of federal and local government expenditures in 2016. True or False: Pensions and income security make up the largest share of federal expenditures.arrow_forward
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