05. Referring to Fig 2d,is it reasonable to infer that pre-tax income is a more important determinant of tax revenue than tax rates (assuming that tax cuts are expected to decrease tax revenue)? YES No Fig 2d. Avg pre-tax income & Avg federal tax payments by income class; Tax changes & RecessionsSources: NBER, Tax Found., CBO. (Avg federal tax payments = avg. pre-tax income - avg after-tax income)recession years2000600Imajor tax cuts1800Itax increases5001600-avg. pretax income ofTop 1%--avg. pretax income ofTop 5%1400400-avg. pretax income ofTop 10%1200-avg. pretax income ofHighest Quintile1000300-avg. pretax income ofAll Quintiles-Avg. federal taxes paidby Top 1%800Avg. federal taxes paidby Top 5%200600Avg. federal taxes paidby Top 10%Avg. federal taxes paidby Highest Quintile400100-Avg. federal taxes paidby All Quintiles20019791980198119821983198419851986 198719881989 1990 1991199219931994 19951996 19971998 1999 2000 2001 2002 2003 2004 2005 2006 2007recession years2000 2000 | 20002000 200020002000major tax cuts2000 2000 20002000 20002000 2000tax increases20002000avg. pretax income of Top 1%550.0 518.5 514.9 537.1 588.0 647.3 695.1 904.8 731.4 921.1 857.2 822.6 741.5 840.9 807.9 833.0 918.1 1012.6 1161.2 1304.3 1419.6 1551.3 1227.8 1087.6|1160.7| 1380.0|1660.4 1790.8 1873.0avg. pretax income5%248.8 236.9 232.7 238.0 250.6 274.7 285.9 344.3 305.2 346.6 338.2 324.5 304.7 330.3 323.8 334.3 358.7 384.4 423.7 461.9 492.3 522.4 444.3 406.9 430.4 485.8 555.5 582.4 611.2182.8 176.7 174.5 176.1 184.4 199.7 206.4 238.6 220.0 241.6 239.0 230.5 220.1 233.0 231.4 237.6 249.8 267.0 287.5 308.5 328.4 344.4 303.1 283.7 295.9 327.0 362.0 377.7 394.5avg. pretax income of Top 10%avg. pretax income of Highest Quintile140.3 135.7 134.7 134.7 139.2 148.9 152.9 172.5 162.5 174.8 173.9 168.8 162.9 170.1 170.2 173.6 181.8 190.9 202.3 214.7 227.5 236.5 213.9 203.3 210.1 227.8 246.7 256.0 264.7avg. pretax income of All Quintiles63.4 61.3 | 61.1 60.9 | 61.364.0 65.6| 70.4 68.0 71.0 71.6 70.8 69.0 | 70.8 | 71.1| 72.0 74.7 77.2 80.3 84.2 87.8 89.2 | 84.2 | 80.6 81.8 86.3 90.5 93.3 96.0Avg. federal taxes paid by Top 1%203.4 179.3 163.8 148.5 163.2 182.8 187.7 230.7 228.2 273.4 247.5 236.6 221.4 257.2 278.5 297.9 331.7 364.5 405.5 436.1 475.8 512.6 403.3 357.1 367.8 433.1 524.5 559.9 553.3Avg. federal taxes paid by Top 5%79.2 72.9 68.4 62.0 64.171.6 72.6 84.8 87.0 96.2 91.9 | 87.7 84.2 92.8 98.7 104.8 114.1 123.1 134.0 142.3 153.4 161.8 133.2 120.2 122.8 139.4 162.3 169.5 170.7Avg. federal taxes paid by Top 10%54.151.349.2 | 44,5 45,750.4 51.1| 57.959.964.562.7 60,358.4 62.666.2 69.8 74.5 80.385.9 90,4 97.5101.8 86.3 79.179.5 88.6 99.9 104.2 105.2Avg. federal taxes paid by Highest Quintile 38.6 37.0 | 36.2 | 32.8 33.236.1 36.7 41.041.944.843.9 42.4 41.343.545.6 47.5 50.653.5 56.6 59.3 63.766.2 | 57.1 52.952.4 57.563.5 66.1| 66.4Avg. federal taxes paid by All Quintiles14.113.613.712.612.513.4 13.7 14.7 14.715.515.4 15.2 14.815.215.716.0 16.8 17.618.4 19.0 20.120.518.0 16.716.217.318.619.3 19.6avg. pre-tax income in thousands of $avg. tax payments in thousands of $

Tax refers to the compulsory charges levied by the government on its citizen and the citizen. The…

Answered: Referring to Fig 2d,is it reasonable to…

Referring to Fig 2d,is it reasonable to infer that pre-tax income is a more important determinant of tax revenue than tax rates (assuming that tax cuts are expected to decrease tax revenue)? YES No

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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