Congress would like to increase tax revenues by 5 percent. Assume that the average taxpayer in the United States earns $40,000 and pays an average tax rate of 20 percent. a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 5 percent increase in tax revenues?

Congress would like to increase tax revenues by 5 percent. Assume that the average taxpayer in the United States earns $40,000 and pays an average tax rate of 20 percent. a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 5 percent increase in tax revenues?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter3: Organizing And Financing A New Venture

Section: Chapter Questions

Problem 7EP

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Congress would like to increase tax revenues by 5 percent. Assume that the average taxpayer in the United States earns $40,000 and pays an average tax rate of 20 percent. Required: a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 5 percent increase in tax revenues? Note: Round your answer to 2 decimal places. b. This is an example of what type of forecasting? Complete this question by entering your answers in the tabs below. Required A Required B This is an example of what type of forecasting?
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