Chapter 19: Public Finance: The Economics of
38.Explain why economists today tend to favor a comprehensive personal consumption tax.
39.A candidate in the 1992 presidential election argued that our current federal income-tax system should be replaced with a flat-tax. That is, every individual should pay the same percentage of income in federal taxes regardless of his or her income. Evaluate the merits of this policy. In your answer, be sure to include a discussion of both the equity and efficiency considerations of such a tax proposal.
40.What has been the main argument over recent efforts to replace the personal income tax with a value-added tax?
41.Margaret Thatcher, the prime minister of Great Britain in the 1980s introduced a new system to replace local government taxes. The rates were replaced by the Community Charge or 'Poll Tax', which applied the same amount to every individual resident, with an 80% reduction for the
42.In 2007 the total amount of tax collection the federal government brought to the Treasury from all sources was $2.7 Trillion. The population of the U.S. is about 300 million. Assume that all forms of government taxation were abolished and each citizen was required to pay exactly the same as everyone else. What would be the tax burden in dollar terms on each citizen (man, women and child)? How would you characterize a tax system like this? Who would likely protest the most? Who would benefit the most? If the new tax was not repealed, what changes do you believe would take place in the government’s budget?
Step by step
Solved in 3 steps
