Table 12-16The table below provides information on the 4 households that make up a small economy and howmuch they would pay in taxes under 3 types of taxes.HouseholdABCDAbility to Paylow and same as Blow and same as Ahigh and same as Dhigh and same as CooooRefer to Table 12-16. In this economy Tax C exhibitshorizontal and vertical equity.horizontal equity but not vertical equity.vertical equity but not horizontal equity.Tax A100100100100neither horizontal nor vertical equity.Tax B303040140Tax C40506070

Tax is a compulsory financial charge imposed by the government on individuals and businesses. It…

Table 12-16 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. Household A B C D Ability to Pay low and same as B low and same as A high and same as D high and same as C Refer to Table 12-16. In this economy Tax C exhibits horizontal and vertical equity. Tax A 100 100 100 100 horizontal equity but not vertical equity. vertical equity but not horizontal equity. neither horizontal nor vertical equity. Tax B 30 30 40 40 Tax C 40 50 60 70

Table 12-16 The table below provides information on the 4 households that make up a small economy and how much they would pay in taxes under 3 types of taxes. Household A B C D Ability to Pay low and same as B low and same as A high and same as D high and same as C Refer to Table 12-16. In this economy Tax C exhibits horizontal and vertical equity. Tax A 100 100 100 100 horizontal equity but not vertical equity. vertical equity but not horizontal equity. neither horizontal nor vertical equity. Tax B 30 30 40 40 Tax C 40 50 60 70

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. The tax system is used to reduce income inequality through the use of _____ taxes. Select one: a. progressive b. regressive c. efficiency offset d. proportional.?
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suppose Lena makes $50000 per year and Mariah makes $65000 per year. If each pays $5000 in taxes: What would their individual tax rates be? Would you describe this tax system as proportional, progressive, or regressive?
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What type of tax raises the most revenue for the federal government? What is the largest source of revenue for state and local governments? What is the difference between a progressive tax and a regressive tax? Give an example of each.
4. The Laffer curve Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for gin, which is shown on the following graph. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. PRICE (Dollars per bottle) 100 90 80 20 10 0 0 Supply Demand 14 28 42 56 70 84 98 112 126 140 QUANTITY (Bottles) Graph Input Tool At this tax amount, the equilibrium quantity of gin is Market for Gin Suppose the government imposes a $20-per-bottle tax on suppliers. Quantity (Bottles) Demand Price (Dollars per bottle) Tax (Dollars per bottle) 56 60.00 20.00 Supply Price (Dollars per bottle) bottles, and the government collects $ ? 40.00 in tax revenue.
4. The Laffer curve Government-imposed taxes cause reductions in the activity that is being taxed, which has important implications for revenue collections. To understand the effect of such a tax, consider the monthly market for gin, which is shown on the following graph. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Note: Once you enter a value in a white field, the graph and any corresponding amounts in each grey field will change accordingly. Graph Input Tool Market for Gin 100 I Quantity (Bottles Demand Price (Dollars per bottle) 90 Supply 56 80 Şupply Price (Dollars per bottle) 60.00 40.00 70 Tax Dollars per bottle) 20.00 * 60 50 40 30 Demand 20 10 0 14 28 42 56 70 84 98 112 126 140 QUANTITY (Bottles) Suppose the government imposes a $20-per-bottle tax on suppliers. At this tax amount, the equilibrium quantity of gin is bottles, and the government collects S in tax revenue. Now calculate the…
4. 1) Consider the following categories of taxes: I. wealth tax II. consumption tax III. Direct tax IV. Indirect tax Using the above categories only, an estate tax can be considered to be: a. III. only b. IV. only c. Both I. and III. d. Both I. and IV. e. Both II. and IV. 2) Which of the following is true of all social insurance programs? a. They are paid for by funds contributed only by employers. b. They are paid for by funds contributed only by employees. c. The initiation of payments depends on the occurrence of some kind of event in a person's life. d. Whether a person receives payments is contingent on the wealth and/or income of the covered person.
26. Suppose the intersection of the IS and LM curves is to the right of the FE line. According to, the IS-LM model, what would most likely eliminate a disequilibrium among the asset, labor, and goods markets? A) A rise in the price level, shifting the LM curve up and to the left. B) A fall in the price level, shifting the LM curve down and to the right. C) A rise in the price level, shifting the IS curve up and to the right. D) A fall in the price level, shifting the IS curve down and to the left.
6. The negative income tax Many economists believe that a more effective way to supplement the income of the poor is through a negative income tax. Under this scheme, everyone reports his or her income to the government; individuals and families earning a higher income will pay a tax based on that income, while low-income individuals and families receive a subsidy, or negative tax. Assume that the only qualification required to receive a tax credit is low income. Suppose the government uses the following equation to compute a family's tax liability: Taxes Owed = (1/4 of Income) – $6,000 For each of the incomes listed in the following table, determine the tax liability for a family with that income level. (Note: If a family receives a subsidy because its income is too low, be sure to indicate the tax liability as negative.) Income Tax Liability (Dollars per year) (Dollars per year) 12,000 24,000 60,000 True or False: If a family is currently receiving a tax credit, the credit is reduced…
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Suppose the city of Strelsau has a 10% property tax on rental properties. Rudolph makes $100,000 a year and pays $21,000 per year in rent. Fritz makes $40,000 per year and spends $10,800 in rent. Both Rudolph and Fritz rent from Michael. a. How is Strelsau's property tax best described? Regressive Proportional Incidental Progressive b. Who most likely actually pays the tax on rental property? The renters, Rudolph and Fritz, pay it. The landlord, Micheal, pays it. It is split evenly between the renters and the landlord. The renters and landlord negotiate who will pay it.