The income tax rates will be: Lower (income under $40,000) = ________% Middle ($40,000 - 100,000) = ________% Upper (over $100,000) = ________% (fill in space below) b) Income Tax Revenue Referring to the table above, Total income tax revenue = $_______billion (lower) + $_______billion (middle) + $_______billion (upper) = $________billion (fill in space below)
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.
a)
Step 1.A.1. - Personal Income Tax rates
You must decide personal income tax rates for 3 income groups: lower, middle, and upper income. (For each group you will choose the marginal tax rate. Your choices are 0%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, or 50%.)
In the table below, you will find how much revenue you will collect from each income group.
| Income tax revenue (in billions of $) at various tax rates | |||||||||||
| 0% | 5% | 10% | 15% | 20% | 25% | 30% | 35% | 40% | 45% | 50% | |
| Lower | $0 | $20 | $40 | $60 | $80 | $100 | $120 | $140 | $160 | $180 | $200 |
| Middle | $0 | $25 | $50 | $75 | $100 | $125 | $150 | $175 | $200 | $225 | $250 |
| Upper | $0 | $50 | $100 | $150 | $200 | $250 | $300 | $350 | $400 | $450 | $500 |
The income tax rates will be:
Lower (income under $40,000) = ________%
Middle ($40,000 - 100,000) = ________%
Upper (over $100,000) = ________%
(fill in space below)
b)
Income Tax Revenue
Referring to the table above,
Total income tax revenue = $_______billion (lower) + $_______billion (middle) + $_______billion (upper) = $________billion
(fill in space below)
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