Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 20, Problem 5CQQ
To determine
The negative income tax.
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Students have asked these similar questions
MACROECONOMICS
Progressive Tax
Based on your yearly income above, calculate the amount of tax each income bracket would pay
under a progressive tax plan. Each row up to the total income amount should be filled in. For an
example of a completed chart, go to Page 4 of Lesson 05.03: Sharing with Uncle Sam.
Calculate the tax for $95,000.
For example,
$10,000x40%-%$4,000 in tax.
Show your work!!
Proposed Regressive Plan
Calculate the tax for
S25,000. For example,
$10,000x40%=$4,000 in
tax. Show your work!!
10% on income up to $25,000
20% on income between
S25,000 and S34,000
25% on income between
S34,000 and S44,000
30% on income between
$44,000 and S80,000
40% on taxable income over
S80,000
TOTAL TAX PAID (sum of all
rows):
How does a sales tax work?
A. A tax is levied on the value of real property or land.
B. A tax is levied on the consumer as a percentage of the sale of the good or service.
C. A tax is levied on the sale of gold or silver.
D. A tax is levied on a consumer at the end of the year if the consumer bought anything during the year.
Mustafa earns 72,000 TRY in a year. Assume that he has 8,000 TRY tax exemption. The following figure shows the marginal tax rates for different income intervals.a) Calculate total tax payments of Mustafa.b) Calculate average tax rate for Mustafa.
Chapter 20 Solutions
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- Suppose the government rescinds a business tax that had been used to fund an income assistance program for the poor. The decision to rescind the tax implies that, in this case, the government a. values efficiency more than equity. b. values income transfers to the poor. c. profits from collecting taxes. d. values equity more than efficiency.arrow_forwardWhen Ann's income increased from $100,000 to $120,000, her income tax payment increased from $22,000 to $30,000. Ann's average tax rate is and her marginal tax rate is A. 25 percent; 25 percent B. 40 percent; 25 percent C. 40 percent; 40 percent D. 25 percent; 40 percentarrow_forwardSuppose that college tuition is eliminated for every admitted student to a public community college or a public 4‑year college or university. a. Such a policy would likely lead to a.a decrease in human capital, conferring a cost b.an increase in human capital, conferring a benefit . b. Such a policy would also lead to a.lower taxes, conferring a benefit b.higher taxes, conferring a cost . c. Such a policy would also lead to a a.rise b.fall in enrollment at private colleges and universities.arrow_forward
- Define individual income tax. A. Individual income tax is the tax an individual pays to the government based on their income from wages.B. Individual income tax is a tax levied on corporations.C. Individual income tax is a tax levied on the value of property or land.D. Individual income tax is a tax paid on a specific product. The producer often passes the cost of the tax to the consumer.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_forwardThe tax system is used to reduce income inequality through the use of _____ taxes. Select one: a. progressive b. regressive c. efficiency offset d. proportionalarrow_forward
- Cities and towns mainly rely for revenue on a. excise taxes. b. income taxes. c. payroll taxes. d. property taxes. Official data may overstate the extent of poverty because a. it overstates the taxes paid by the poor. b. it overestimates the amount the poor earn in the “underground economy.” c. it does not add “in-kind” transfers to the incomes of the poor. d. poverty is a relative concept as opposed to an absolute concept.arrow_forwardUse information from paragraph 4 to answer the following question. Before the Progressive Era, many taxes had been based on property. But many wealthy people hid such property as stocks and bonds from the govemment and did not pay taxes on them. Largely for this reason, progressives demanded that taxes be based on income rather than on property. In 1911, Wisconsin passed the first effective state income tax law. Two years later, Congress enacted what became the first permanent federal income tax in the United States. Which conclusion about taxation during the Progressive Era is best supported by the text? O Progressives demanded that taxes be based on income rather than on property. O Property taxes included ownership of stocks and bonds, which are inescapable today. O Property taxes were an ineffective means for the government to collect the money it needed to operate. O Progressives managed to pass the first state income tax, which was two years before the federal law was passed. 7 8…arrow_forwardQuestion 1 Assume no Washington income tax, and Washington has a $4M grant to spend. Zoe Wu tells the mayor that a means-tested program would allow the poor to get more money. She suggests that benefits should be redunced by $10 for each $100 in workers’ pre-tax income. Suppose the guarantee rate is G. How much benefit would each group get at their original income (working 40 weeks) in terms of G? 2 2. With the $4M grant, how large can G be? How much benefit does each group get? What is the maximum income in the phase-out region? Draw the benefit schedule with labels. Suppose the government could identify workers’ type and sent them money equal to your answer in part (b), regardless of their labor supply choice. (a) What is the percentage change in workers’ wealth, the dollar value of their time plus unearned income? (b) How many weeks per year would each type work using the elasticity of η = −0.1? Compare your answer to 4(d). Explain why they are similar or…arrow_forward
- 97. If the United States is to reduce poverty by using a negative income tax, the guaranteed income should be a. above the poverty line. b. close to the median income of all families. c. two times the tax rate. d. close to the poverty line.arrow_forwardUse a circular flow diagram to show how the allocation of resources and the distribution of income are affected by each of the following government actions. a. The construction of a new high school. b. A 2-percentage-point reduction of the corporate income tax. c. An expansion of preschool programs for disadvantaged children. d. The levying of an excise tax on pollutersarrow_forwardIf the benefits from an antipoverty program are phasedout as an individual’s income increases, the program willa. encourage greater work effort from the poor.b. lead to an excess supply of labor among unskilledworkers.c. cost the government more than a program thatbenefits everyone.d. increase the effective marginal tax rate that thepoor face.arrow_forward
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