LABOR ECONOMICS LOOSELEAF 8/E
8th Edition
ISBN: 9781264010516
Author: BORJAS
Publisher: MCG
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Question
Chapter 8, Problem 9P
To determine
Determine how the given tax change policy affects the job mobility.
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Students have asked these similar questions
Use the below table to calculate the amount of federal income tax that Kristen should report
if she earned a taxable income of $87,011 in 2017?
Federal Tax Rates for 2017
15% on the first $44,784 of taxable income, plus
19% on the next $45,594 of taxable income, plus
26.5% on the next $50,628 of taxable income, plus
32% on any further taxable income
Income tax = $
hs
The following table shows income tax rates in Econoland.
Annual Income
Up to $60,000
From $60,001 to $90,000
Over $90,000
This is an example of a
Tax Rate
10%
20%
30%
income tax.
Nick, a resident of Econoland, currently works 20 hours a week and earns an annual income of $60,000. After paying income taxes, Nick receives
per year.
If Nick works an additional 10 hours a week (30 hours a week total), his annual income will be $90,000. After paying income taxes, Nick will receive
per year. In other words, by working an additional 10 hours per week, Nick will receive an additional
If Nick works 10 more hours in a week (40 hours a week total), his annual income will further increase to $120,000. After paying income taxes, Nick
will receive
per year. In other words, by working 10 more hours per week, Nick will receive
more than what he
would receive if he works only 30 hours a week.
As Nick works more, the additional amount he receives from working 10 more hours
"
which means his cost of…
Suppose you earned $60,000 per year and pay taxes based on marginal tax rates. The first tax bracket which taxes at 10% ranges from zero dollars to $30,000. The second tax bracket which tax at 25% ranges from 30,001 to $120,000. How much will you pay in total taxes?
Chapter 8 Solutions
LABOR ECONOMICS LOOSELEAF 8/E
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- As part of Budget 2018, the Government of Canada introduced the Canada Workers Benefit (CWB) that will take affect starting on January 1, 2019. The CWB is a tax credit that supplements the earnings of low-income workers. For a single individual with no children, the structure of the CWB in 2023 is as follows. • No credit for earnings less than or equal to $3,000 • A 27% credit on each dollar of income earned over $3,000 up to a maximum of $1,428 • The maximum credit is reduced by 15% for each dollar eared above $23,495 Based on these parameters, please answer the following. (a) What is the "phase in" region for the CWB? In other words, what is the income range over which workers receive an increasing CWB subsidy? You may answer using a graph, an equation or using words. If you choose to characterize the phase-in region using words, then your answer must be very precise. (b) What is the "break even" level of earnings above which a single worker no longer receives a CWB subsidy? (c)…arrow_forwardSusan is a single mother with three children. She is a cashier at a food market earning $7.75 per hour and works up to 2,000 hours per year. She is eligible for government benefits, so if she does not earn any income, she will receive a total of $17,050 per year. She can work and still receive government benefits, but for every $1 of income, her government stipend is $1 less. The government has decided to change the benefits policy of every $1 of income earned to reduce the government’s stipend by 60 cents. How will this change Susan's benefits received? What are her new choices? Complete the Revised Poverty Trap Table to present Susan’s options and provide answers to the following: What are the advantages of Susan working? What are the disadvantages of Susan working? What are the advantages of Susan receiving government benefits? What are the disadvantages of Susan receiving government benefits? Based on your findings from the Poverty Trap Table, should Susan continue to work or…arrow_forwardSusan is a single mother with three children. She is a cashier at a food market earning $7.75 per hour and works up to 2,000 hours per year. She is eligible for government benefits, so if she does not earn any income, she will receive a total of $17,050 per year. She can work and still receive government benefits, but for every $1 of income, her government stipend is $1 less. The government has decided to change the benefits policy of every $1 of income earned to reduce the government’s stipend by 60 cents. How will this change Susan's benefits received? What are her new choices? Complete the Revised Poverty Trap Table to present Susan’s options and provide answers to the following: What are the advantages of Susan working? What are the disadvantages of Susan working? What are the advantages of Susan receiving government benefits? What are the disadvantages of Susan receiving government benefits? Based on your findings from the Poverty Trap Table, should Susan continue to work…arrow_forward
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- Laura earns a base salary of $50,000 as an event planner and is subject to the following hypothetical income tax bracket. Laura is considering taking on an additional wedding that will increase her income by $5,000. In order for Laura to deem the wedding worth her time, it must earn her $3,000 after taxes. Please round all answers to two decimal places. Income Tax rate $0-$10,000 5% $10,001-$30,000 10% 20% $30,001-$50,000 $50,001+ 50% What is the marginal tax rate associated with taking on this wedding? 50 What is Laura's average tax rate if the extra wedding is accepted? 0.1636arrow_forwardCarole works 35 hours a week at a wage rate of $20. Thus, her total weekly income is $700 On this income, she pays total taxes of $49.00 However, she calculates that on the last hour that she works, she pays $4.00 Carole's average tax rate is% (Round your response to two decimal places) Carole's marginal tax rate is% (Round your response to two decimal places) Darrow_forwardFor every hour up to 40 hours of work each week, Mary earns $16/hour, and for any extra hour in excess of 40, she earns $20/hour. The current tax rate that she faces is 20%. She also needs to pay $4 per each hour she works for childcare service while receives $80 in childcare support payments each week. Mary has 16 non-sleeping hours a day (112 hours) in a week. Her non-labour market income is $60 per week. What will be her weekly consumption amount if she works for 58 hours a week?arrow_forward
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