Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506893
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Question
Chapter ST1, Problem 5CQ
To determine
The effects of increase in the no of people paying no taxes on the efficiency of the political process.
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A proportional tax, sometimes referred to as a flat tax, is a kind of income tax wherein all taxpayers are taxed at the same percentage rate, no matter how high or low their income. A proportional tax system means that everyone experiences the same tax rate, whether low, middle, or high-income.
Those who support a proportional tax argue that the system is fairest because the rules are simple and straightforward and no one is exempt; however, there is a huge con of proprtional taxes. Explain what that is.
Essay
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?
Reagan campaigned for a phased 30 percent tax cut within the next three years in officeMost of the tax cuts focused on the lower -income and poverty levels . True or False?
Chapter ST1 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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- A 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_forwardThose on the political left would tend to favor _____ government action and _____ taxation to reduce income inequality. more; lower less; higher more; higher less; lowerarrow_forwardIf low-income families pay 10% of their income in taxes while high-income families pay 20% of their income in taxes, the tax system is which of the following? Group of answer choices Unfair Regressive Excessive Proportional Progressivearrow_forward
- 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)?arrow_forwardSuppose in Fiscalville there is no tax on the first $10,000 of income, but a 20 percent tax on earnings between $10,000 and $20,000 and a 30 percent tax on income between $20,000 and $30,000. Any income above $30,000 is taxed at 40 percent. If your income is $50,000, how much will you pay in taxes? Determine your marginal and average tax rates. Is this a progressive tax? Explain.arrow_forward
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