Scenario: You have just been hired by the country of "Shorelinia" to create a tax system. Your tax system must collect at least $1,000 billion in revenue. You have three taxes to choose from; income tax, sales tax, and payroll tax. c) You must decide the SalesTax. For reference, state and local sales taxes around Seattle add up
Scenario: You have just been hired by the country of "Shorelinia" to create a tax system. Your tax system must collect at least $1,000 billion in revenue. You have three taxes to choose from; income tax, sales tax, and payroll tax.
c)
You must decide the SalesTax. For reference, state and local sales taxes around Seattle add up to approximately 10%, some of the highest in America. In the USA, there is no national sales tax, although a number of countries have them, also known as VATs (value added taxes) or GSTs (general sales taxes.)
| Sales tax revenue (in billions of $) at various tax rates | |||||||
| 0% | 2% | 4% | 6% | 8% | 10% | 12% | |
| revenue | $0 | $60 | $120 | $180 | $240 | $300 | $360 |
The sales tax rate in Shorelinia will be _______%.
(fill in space below)
d)
Sales tax revenue
Look up the tax revenue generated by your chosen tax rate in the table above.
The sales tax revenue will be $_______billion.
(fill in space below)
e)
Payroll Tax rate
In the country of Shorelinia, the payroll tax is similar to the Social Security system in the USA. It is collected on wage/salary income up to $100,000 a year. Above this amount, the effective tax rate is 0%. For reference, it is approximately 8% in the USA, with a similar percentage paid by the employer.
| Payroll tax revenue (in billions of $) at various tax rates | |||||||
| 0% | 2% | 4% | 6% | 8% | 10% | 12% | |
| revenue | $0 | $75 | $150 | $225 | $300 | $375 | $450 |
The employee payroll tax rate will be _______%.
(fill in space below)
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