Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 32, Problem 7SPPA
To determine
To find:
The size of tax wedge on wages, and the true tax rate on the interest income.
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The FICA tax is levied on employers, employees, and certain self-employed individuals.
Revenue goes to Social Security and Medicare. In 2014, the employee's contribution to the
retirement part of the FICA tax was 6.2 percent of the first $117,000 earned in wages and
salaries. (Medicare is withheld on all wages and tips.) People with income from interest and
dividend
payments do not have to pay any Social Security tax on this income.
What is the tax structure for the income tax over the income range of $0 to $117,000?
O Proportional Tax
O Progressive Tax
Regressive Tax
There are two individuals in a society. The federal income tax in this society is such that that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. James earns a gross income of $40,000, and Jane earns a gross income of $65,000. Out of his income, James pays $1,000 in local taxes; out of her income, Jane pays $20,000 in local taxes. Which of the following statements is true?
a. The federal tax system is proportional.
b. James’ total (local + federal) tax bill is greater than Jane’s total tax bill.
c. The federal tax system is regressive
d. The federal tax system is progressive.
There are two individuals in a society. The federal income tax in this society is such that that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. James earns a gross income of $40,000, and Jane earns a gross income of $65,000. Out of his income, James pays $1,000 in local taxes; out of her income, Jane pays $20,000 in local taxes. Which of the following statements is true?
A.The federal tax system is progressive.
B.James’ total (local + federal) tax bill is greater than Jane’s total tax bill.
C.The federal tax system is proportional.
D.The federal tax system is regressive
Chapter 32 Solutions
Foundations of Economics (8th Edition)
Ch. 32 - Prob. 1SPPACh. 32 - Prob. 2SPPACh. 32 - Prob. 3SPPACh. 32 - Prob. 4SPPACh. 32 - Prob. 5SPPACh. 32 - Prob. 6SPPACh. 32 - Prob. 7SPPACh. 32 - Prob. 8SPPACh. 32 - Prob. 9SPPACh. 32 - Prob. 10SPPA
Ch. 32 - Prob. 1IAPACh. 32 - Prob. 2IAPACh. 32 - Prob. 3IAPACh. 32 - Prob. 4IAPACh. 32 - Prob. 5IAPACh. 32 - Prob. 6IAPACh. 32 - Prob. 7IAPACh. 32 - Prob. 8IAPACh. 32 - Prob. 9IAPACh. 32 - Prob. 10IAPACh. 32 - Prob. 11IAPACh. 32 - Prob. 1MCQCh. 32 - Prob. 2MCQCh. 32 - Prob. 3MCQCh. 32 - Prob. 4MCQCh. 32 - Prob. 5MCQCh. 32 - Prob. 6MCQCh. 32 - Prob. 7MCQCh. 32 - Prob. 8MCQ
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