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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Suppose that gifts were taxed at a rate of Chapter 30, Problem 4SCQ, Suppose that gifts were taxed at a rate of for amounts up to and for anything over that amount. , example  1 for amounts up to Chapter 30, Problem 4SCQ, Suppose that gifts were taxed at a rate of for amounts up to and for anything over that amount. , example  2 and Chapter 30, Problem 4SCQ, Suppose that gifts were taxed at a rate of for amounts up to and for anything over that amount. , example  3 for anything over that amount. Would this tax be regressive or progressive?

To determine

The type of tax (progressive/ regressive) it is when a gift tax of 10% is imposed on amount up to $10,000 and 20% above $10,000.

Explanation

When the marginal tax rate increases as the income increases, it is called progressive taxation. In case of progressive taxation, people with lower income pay lower taxes, while people with higher incomes pay higher taxes.

When the marginal tax rate reduces as the income increases, it is called regressive taxation. In case of regressive taxation, people with lower incomes pay higher taxes while people with higher incomes pay lower taxes...

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