Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
Question
Chapter 20.2, Problem 2QQ
To determine

Taxing the high earner for supplementing the low earner.

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Those on the political left would tend to favor _____ government action and _____ taxation to reduce income inequality. more; lower less; higher more; higher less; lower
please answer the following question: 1. Which of the following is an example of govemment discretionary spendingA) Social Security retirement paymentsB) defense spendingC) net interest paid on government debD) Medicare benefits for the elderly
To 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)?
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