Loose-leaf Version for Economics & LaunchPad (Twelve Month Access)
4th Edition
ISBN: 9781319035877
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
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Question
Chapter 18, Problem 1BCQ
To determine
Concept Introduction:
Tax Policy: Tax policy refers to the taxes made applicable by the government in a country. Tax policy stands for the decisions taken by the government regarding the tax rate to apply, on whom to apply and what taxes to make applicable.
Expert Solution & Answer
Explanation of Solution
- In the present case, it is given that Norway has a tax policy of higher taxes than the United States.
- Norway is a welfare state which provides the insurance for unemployed people of its country which is financed by charging higher rates of taxes from the entrepreneurs.
- The entrepreneurs who pay higher taxes to provide for insurance are also financed by the government if they see a fall in their business.
- On the other hand, in the United States, the benefits provided to the citizens are not as high as Norway and are for a limited period of time.
- The benefit is provided to an unemployed person, the reason for their
unemployment should be proved to be genuine and the person should be looking for a job.
Conclusion:
Thus, Norway has a higher tax policy than United States because it is a welfare state.
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Chapter 18 Solutions
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