Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings. a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal. b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings. a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal. b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
Chapter17: Income, Poverty, And Health Care
Section: Chapter Questions
Problem 5P
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Helping America’s seniors. Suppose that the government proposes eliminating any tax on earnings from work which are less than $20,000 for Americans at least 62 years old. Seniors earning more than this threshold would still be subject to the normal income tax rates on higher earnings.
a. Sketch a budget constraint in the leisure-income diagram consistent with this proposal.
b. If the proposal were adopted, what do you predict would happen to the labor supply of seniors? Explain.
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