Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 28, Problem 9CQ
To determine
Impact of tax on employment and measures to reduce personal effect of tax.
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Chapter 28 Solutions
Economics: Private and Public Choice
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- What do you think would happen if there were no taxes and you could spend all your money on capital and employee wages?arrow_forwardShari can work up to 80 hours each week at a pre-tax wage of $20 per hour but faces a 10% payroll tax. Under these conditions, she maximizes her utility by choosing to work 35 hours each week. The government proposes a negative income tax whereby everyone is given $105 each week, and anyone can supplement their income by working. To pay for the negative income tax, the payroll tax rate will be increased to 25%. a. On a single graph, draw Shari's original budget line and her budget line under the negative income tax. b. Show that Shari will choose to work fewer hours if the negative income tax is adopted. c. Will Shari's utility be greater under the negative income tax?arrow_forwardWhere do most people's largest portion of their personal income comes from?arrow_forward
- you have $84.25. you get additional money for mowing lawns. then you purchase a new pair of shoes for $75.49 and $63.76 left. how much money do you earn mowing lawns?arrow_forwardYour paycheck for the year is higher this year than last year. Does that mean that your real income has increased.arrow_forwardConsider by $150. The average citizen there spends 90% of each additional dollar of income earned. a government that raises taxes Calculate the total change in income (Y) that will result. Carefully follow all numeric directions. Use a negative number to indicate a decrease in Y and a positive number to indicate an increase.arrow_forward
- Talk with some classmates about how much a family of four (two parents and two young children) in your area would have to pay each year for food, clothes, a place to live, energy, and other basic needs. What number do you get? How does this amount of money relate to the 2010 poverty line of $ 22, 213 for a family of four?arrow_forwardWhat is the difference between in-kind and cash transfers? Winch might increase the utility of the recipients the most? Why is there political resistance to the negative income tax?arrow_forwardCalculate Social Security taxes, Medicare taxes, and FIT for Jordon Barrett. He earns a monthly salary of $11,900. He is single. Before this payroll, Barrett's cumulative earnings were $142,100. (Social Security maximum is 6.2% on $142,800 and Medicare is 1.45%.) Calculate FIT by the percentage method. (Use Table 9.1) Note: Round your answers to 2 decimal places. FIT Social Security taxes $ 737.80 Medicare taxes $ 172.55arrow_forward
- Suppose you have a choice of working full-time during the summer or going full-time to summer school. Summer tuition and books are $2,200. If you worked, you could make $7,000. Your rent is $1,000 for the summer, regardless of your choice. What is the opportunity of your choice of going to summer school?arrow_forwardWhat makes the Earned Income Tax Credit (EITC) different from other poverty-fighting programs? The amount of the credit is doubled if the head of household is attending college. The tax credit is phased out gradually, rather than at a specific income cutoff point. The amount of the credit is not determined by the number of dependent children in the household. The EITC doesn't require the recipient to pay a minimum amount of income tax in order to receive the credit. It creates less of an incentive to work than other programs.arrow_forwardIf I budgeted $1000 for my expenses this month, but then spent $1500, in order to be fiscally responsible, what do I need to do now?arrow_forward
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