5) Complete this table for both the plans Group Income per household A B C D E F A B C The third proposal we'll consider is a progressive tax, where lower income groups are taxed at a lower percent rate, and higher income groups are taxed at a higher percent rate. For simplicity, we're going to assume that a household is taxed at the same rate on all their income. D $12,000 $29,000 $50,000 $79,000 $129,000 $295,000 6) Set progressive tax rates for each income group to bring in enough money. There is no one right answer here - just make sure you bring in enough money! Tax rate Income tax Group Income per household (%) per household Total tax collected for all households E F Flat Tax Plan Income tax per household $12,000 $29,000 $50,000 $79,000 $129,000 $295,000 Income after taxes Modified Flat Tax Plan Income tax per Income after household taxes This better total to $800,000 Income after taxes per household 7) Which plan seems the most fair to you? Which plan seems the least fair to you? Why?
5) Complete this table for both the plans Group Income per household A B C D E F A B C The third proposal we'll consider is a progressive tax, where lower income groups are taxed at a lower percent rate, and higher income groups are taxed at a higher percent rate. For simplicity, we're going to assume that a household is taxed at the same rate on all their income. D $12,000 $29,000 $50,000 $79,000 $129,000 $295,000 6) Set progressive tax rates for each income group to bring in enough money. There is no one right answer here - just make sure you bring in enough money! Tax rate Income tax Group Income per household (%) per household Total tax collected for all households E F Flat Tax Plan Income tax per household $12,000 $29,000 $50,000 $79,000 $129,000 $295,000 Income after taxes Modified Flat Tax Plan Income tax per Income after household taxes This better total to $800,000 Income after taxes per household 7) Which plan seems the most fair to you? Which plan seems the least fair to you? Why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![5) Complete this table for both the plans
Group
A
B
C
D
E
F
A
B
C
D
Income per
household
The third proposal we'll consider is a progressive tax, where lower income groups are taxed at a
lower percent rate, and higher income groups are taxed at a higher percent rate. For simplicity,
we're going to assume that a household is taxed at the same rate on all their income.
E
$12,000
$29,000
$50,000
$79,000
$129,000
$295,000
6) Set progressive tax rates for each income group to bring in enough money. There is no one
right answer here - just make sure you bring in enough money!
Group Income per
Income tax
Tax rate
(%)
household
Total tax
collected for all
households
per
household
F
Flat Tax Plan
Income tax
per
household
$12,000
$29,000
$50,000
$79,000
$129,000
$295,000
Income after
taxes
Modified Flat Tax Plan
Income tax per Income after
household
taxes
Income after
taxes per
household
This better total
to $800,000
7) Which plan seems the most fair to you? Which plan seems the least fair to you? Why?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13801478-58e7-4a9e-a386-f915d8205106%2F638f7a1e-40b2-4b7c-bd64-ab3256a8b4a8%2Fw0iu5ji_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5) Complete this table for both the plans
Group
A
B
C
D
E
F
A
B
C
D
Income per
household
The third proposal we'll consider is a progressive tax, where lower income groups are taxed at a
lower percent rate, and higher income groups are taxed at a higher percent rate. For simplicity,
we're going to assume that a household is taxed at the same rate on all their income.
E
$12,000
$29,000
$50,000
$79,000
$129,000
$295,000
6) Set progressive tax rates for each income group to bring in enough money. There is no one
right answer here - just make sure you bring in enough money!
Group Income per
Income tax
Tax rate
(%)
household
Total tax
collected for all
households
per
household
F
Flat Tax Plan
Income tax
per
household
$12,000
$29,000
$50,000
$79,000
$129,000
$295,000
Income after
taxes
Modified Flat Tax Plan
Income tax per Income after
household
taxes
Income after
taxes per
household
This better total
to $800,000
7) Which plan seems the most fair to you? Which plan seems the least fair to you? Why?
![Imagine the country is made up of 100 households. The federal government needs to collect
$800,000 in income taxes to be able to function. The population consists of 6 groups:
Group A: 20 households that earn $12,000 each
Group B: 20 households that earn $29,000 each
Group C: 20 households that earn $50,000 each
Group D: 20 households that earn $79,000 each
Group E: 15 households that earn $129,000 each
Group F: 5 households that earn $295,000 each
This scenario is roughly proportional to the actual United States population and tax needs. We
are going to determine new income tax rates.
The first proposal we'll consider is a flat tax- one where every income group is taxed at the
same percentage tax rate.
1) Determine the total income for the population (all 100 people together)
2) Determine what flat tax rate would be necessary to collect enough money.
The second proposal we'll consider is a modified flat-tax plan, where everyone only pays taxes
on any income over $20,000. So, everyone in group A will pay no taxes. Everyone in group
will pay taxes only on $9,000.
3) Determine the total taxable income for the whole population
4) Determine what flat tax rate would be necessary to collect enough money in this modified
system](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13801478-58e7-4a9e-a386-f915d8205106%2F638f7a1e-40b2-4b7c-bd64-ab3256a8b4a8%2F0ni4c9j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Imagine the country is made up of 100 households. The federal government needs to collect
$800,000 in income taxes to be able to function. The population consists of 6 groups:
Group A: 20 households that earn $12,000 each
Group B: 20 households that earn $29,000 each
Group C: 20 households that earn $50,000 each
Group D: 20 households that earn $79,000 each
Group E: 15 households that earn $129,000 each
Group F: 5 households that earn $295,000 each
This scenario is roughly proportional to the actual United States population and tax needs. We
are going to determine new income tax rates.
The first proposal we'll consider is a flat tax- one where every income group is taxed at the
same percentage tax rate.
1) Determine the total income for the population (all 100 people together)
2) Determine what flat tax rate would be necessary to collect enough money.
The second proposal we'll consider is a modified flat-tax plan, where everyone only pays taxes
on any income over $20,000. So, everyone in group A will pay no taxes. Everyone in group
will pay taxes only on $9,000.
3) Determine the total taxable income for the whole population
4) Determine what flat tax rate would be necessary to collect enough money in this modified
system
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