Bundle: Principles of Microeconomics, Loose-Leaf Version, 7th + Principles of Macroeconomics, Loose-Leaf Version, 7th + MindTap Economics, 2 terms (12 ... for Mankiw’s Principles of Economics, 7th
7th Edition
ISBN: 9781337380300
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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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)?
Chapter 20 Solutions
Bundle: Principles of Microeconomics, Loose-Leaf Version, 7th + Principles of Macroeconomics, Loose-Leaf Version, 7th + MindTap Economics, 2 terms (12 ... for Mankiw’s Principles of Economics, 7th
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- Explain how proportional income tax would increase hours of labour suppliedarrow_forwardTo reduce income inequality, should the marginal tax rates on the top 1 be increased?arrow_forwardHorizontal equity in a taxation system is the idea that Select one: a.those who earn more should pay more tax. b.everyone should pay the same amount of tax. c.all taxpayers should be treated the same. d.those who earn the same should pay the same tax. Which of the following taxation systems does not conform to the idea of vertical equity? Select one: a.A flat tax where every dollar of income is taxed at 25 percent. b.A progressive tax system. c.GST. d.A poll tax where every taxpayer pays an identical lump sum amount of $10,000 in tax.arrow_forward
- Should the richest Americans be taxed on their wealth? Rich Americans have already paid income tax on the earnings that made them rich in the first place. Isn’t taxing wealth double taxation?arrow_forwardA progressive tax is: A. designed to take a greater percentage of the income of lower-income groups than of higher-income groups B. based on the benefits received principle. C. not based on the ability to pay principle D. designed so that everybody would be charged the same percentage of their income as taxes. E. designed to take a larger percentage of the income of higher-income groups than of lower-income groupsarrow_forwardWhich of the following programs are often funded by the payroll tax? Check all that apply. A. social security programs B. unemployment benefits C. library services D. education servicesarrow_forward
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