Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 20, Problem 5QCMC
To determine
The negative income tax.
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Students have asked these similar questions
What effect does implementing a
progressive tax system have on income
inequality in a country?
A. It increases income inequality.
B. It has no effect on income inequality.
C. It decreases income inequality.
D. It first decreases income inequality, then
increases it.
MACROECONOMICS
Progressive Tax
Based on your yearly income above, calculate the amount of tax each income bracket would pay
under a progressive tax plan. Each row up to the total income amount should be filled in. For an
example of a completed chart, go to Page 4 of Lesson 05.03: Sharing with Uncle Sam.
Calculate the tax for $95,000.
For example,
$10,000x40%-%$4,000 in tax.
Show your work!!
Proposed Regressive Plan
Calculate the tax for
S25,000. For example,
$10,000x40%=$4,000 in
tax. Show your work!!
10% on income up to $25,000
20% on income between
S25,000 and S34,000
25% on income between
S34,000 and S44,000
30% on income between
$44,000 and S80,000
40% on taxable income over
S80,000
TOTAL TAX PAID (sum of all
rows):
How does a sales tax work?
A. A tax is levied on the value of real property or land.
B. A tax is levied on the consumer as a percentage of the sale of the good or service.
C. A tax is levied on the sale of gold or silver.
D. A tax is levied on a consumer at the end of the year if the consumer bought anything during the year.
Chapter 20 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Knowledge Booster
Similar questions
- Suppose the government rescinds a business tax that had been used to fund an income assistance program for the poor. The decision to rescind the tax implies that, in this case, the government a. values efficiency more than equity. b. values income transfers to the poor. c. profits from collecting taxes. d. values equity more than efficiency.arrow_forwardWhen Ann's income increased from $100,000 to $120,000, her income tax payment increased from $22,000 to $30,000. Ann's average tax rate is and her marginal tax rate is A. 25 percent; 25 percent B. 40 percent; 25 percent C. 40 percent; 40 percent D. 25 percent; 40 percentarrow_forwardSuppose that college tuition is eliminated for every admitted student to a public community college or a public 4‑year college or university. a. Such a policy would likely lead to a.a decrease in human capital, conferring a cost b.an increase in human capital, conferring a benefit . b. Such a policy would also lead to a.lower taxes, conferring a benefit b.higher taxes, conferring a cost . c. Such a policy would also lead to a a.rise b.fall in enrollment at private colleges and universities.arrow_forward
- Define individual income tax. A. Individual income tax is the tax an individual pays to the government based on their income from wages.B. Individual income tax is a tax levied on corporations.C. Individual income tax is a tax levied on the value of property or land.D. Individual income tax is a tax paid on a specific product. The producer often passes the cost of the tax to the consumer.arrow_forwardMatch the term and the definition: flat tax Places heavier burden on poor than on rich as your income increases, the percentage that you pay increases A. Progressive taxes B. Proportional taxes C. Regressive taxesarrow_forwardMustafa earns 72,000 TRY in a year. Assume that he has 8,000 TRY tax exemption. The following figure shows the marginal tax rates for different income intervals.a) Calculate total tax payments of Mustafa.b) Calculate average tax rate for Mustafa.arrow_forward
- Use information from paragraph 4 to answer the following question. Before the Progressive Era, many taxes had been based on property. But many wealthy people hid such property as stocks and bonds from the govemment and did not pay taxes on them. Largely for this reason, progressives demanded that taxes be based on income rather than on property. In 1911, Wisconsin passed the first effective state income tax law. Two years later, Congress enacted what became the first permanent federal income tax in the United States. Which conclusion about taxation during the Progressive Era is best supported by the text? O Progressives demanded that taxes be based on income rather than on property. O Property taxes included ownership of stocks and bonds, which are inescapable today. O Property taxes were an ineffective means for the government to collect the money it needed to operate. O Progressives managed to pass the first state income tax, which was two years before the federal law was passed. 7 8…arrow_forwardWhat is the effect of government purchased and taxation on the level of income?arrow_forward97. If the United States is to reduce poverty by using a negative income tax, the guaranteed income should be a. above the poverty line. b. close to the median income of all families. c. two times the tax rate. d. close to the poverty line.arrow_forward
- If the benefits from an antipoverty program are phasedout as an individual’s income increases, the program willa. encourage greater work effort from the poor.b. lead to an excess supply of labor among unskilledworkers.c. cost the government more than a program thatbenefits everyone.d. increase the effective marginal tax rate that thepoor face.arrow_forwardWhat is the best policy to implement with regard to taxes?arrow_forwardTax incidence refers to ? A. the average tax rate. B.how much revenue a tax generates. C.the extent to which a tax is proportional. D. who bears the burden of a tax.arrow_forward
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