Suppose Janet is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Janet resides. Compute the spendable income level Janet would have at each level of earned income and enter these values in the last column of the table. Earned Income from Work (Dollars) Transfer Benefits (Dollars) Income and Employment Taxes Spendable Income (Dollars) 0 9.954 6.000 8.800 12.000 7.389 18,000 5.384 24.000 30,000 2.697 1.033 0 272 772 1,424 2.225 2.656 (Dollars) 9.954 If Janet's income from work increased from $18.000 to $24.000, her implicit marginal tax rate would be If Janet's income from work increased from $24.000 to $30.000, her implicit marginal tax rate would be

Suppose Janet is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Janet resides. Compute the spendable income level Janet would have at each level of earned income and enter these values in the last column of the table. Earned Income from Work (Dollars) Transfer Benefits (Dollars) Income and Employment Taxes Spendable Income (Dollars) 0 9.954 6.000 8.800 12.000 7.389 18,000 5.384 24.000 30,000 2.697 1.033 0 272 772 1,424 2.225 2.656 (Dollars) 9.954 If Janet's income from work increased from $18.000 to $24.000, her implicit marginal tax rate would be If Janet's income from work increased from $24.000 to $30.000, her implicit marginal tax rate would be

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter15: Income Inequality And Poverty

Section: Chapter Questions

Problem 7CQ

See similar textbooks

Similar questions

The United States has established a progressive income tax system, where a worker’s tax rate onearnings increases as she earns more money. There are 168 hours in a given week. Assume thatfor the first 56 hours worked, the tax rate is t1, which means that the net real wage is w*(1-t1).After working the 56th hour, the worker jumps to a higher tax rate t2. After the 112th hourworked, the individual jumps to an even higher tax rate, t3.(a) During most election years, some politicians argue that a having a flat tax system isbetter. Assume that there is a proposal to institute a flat tax, where all workers pay a taxrate equal to t4, which is greater than t3. On the same set of axes, graph the budgetconstraints associated with the progressive tax system and the flat tax system. Make sureto label all of the slopes.(b) Would moving to this proposed flat tax system likely encourage more or fewer hoursworked for relatively high-wage workers? Make sure to explain your answer (a writtenexplanation…
The following table shows income tax rates in Econoland. Annual Income Up to $60,000 From $60,001 to $90,000 Over $90,000 This is an example of a Tax Rate 10% 20% 30% income tax. Nick, a resident of Econoland, currently works 20 hours a week and earns an annual income of $60,000. After paying income taxes, Nick receives per year. If Nick works an additional 10 hours a week (30 hours a week total), his annual income will be $90,000. After paying income taxes, Nick will receive per year. In other words, by working an additional 10 hours per week, Nick will receive an additional If Nick works 10 more hours in a week (40 hours a week total), his annual income will further increase to $120,000. After paying income taxes, Nick will receive per year. In other words, by working 10 more hours per week, Nick will receive more than what he would receive if he works only 30 hours a week. As Nick works more, the additional amount he receives from working 10 more hours " which means his cost of…
Jana has the opportunity to buy the boat of her dreams but needs to determine the best way to fund the purchase. The cost of the boat is $22,000, and she’s considering taking on a second job at which she can earn this amount or selling some investments to generate the cash. However, she realizes that she will also have to pay taxes on any amount she receives. If Jana is in the 35 percent marginal tax bracket and earns $22,000 from a second job, by how much will her end-of-year tax liability increase? What if she elects to sell some investments that she’s held for several years at a gain of $22,000? How would your answer change if she had held the investments for just 6 months?
Laura earns a base salary of $50,000 as an event planner and is subject to the following hypothetical income ta is considering taking on an additional wedding that will increase her income by $5,000. In order for Laura to c worth her time, it must earn her $3,000 after taxes. Please round all answers to two decimal places. What is the marginal tax rate associated with taking on this wedding? Marginal tax rate: Income $0-$10,000 $10,001-$30,000 $30,001-$50,000 $50,001+ Average tax rate: 4 What is Laura's average tax rate if the extra wedding is accepted? ves R Given the information, will Laura undertake this extra wedding? 5 7 Tax rate 5% 10% 20% 50% B T 6 % 45 % 8 9
Suppose that the income tax in a certain nation is computed at a flat rate of 5%, but no tax is levied above $50,000 in taxable income, Taxable income, in turn, is calculated as the individual's income minus $10,000 (i.e., everyone gets a $10,000 deduction). For each of the following three individuals/workers, calculate their average tax rate and marginal tax rate. Make sure you write tax rates as percentages and where necessary, round to two decimal places. A) A part-time worker with an annual gross income of $9,000: average tax rate is marginal tax rate is B) A retail salesperson with annual income of $45,000: average tax rate is rate is %. tax rate is %. C) An advertising executive with annual income of $600,000: average tax rate is %. % and % and marginal tax % and marginal
Barry can work 3120 hours in a (non-leap) year. He has the opportunity to work for $20 per hour. With the income that he earns from working he purchases cans of soup at a price of $1 per can. He has no other income. Barry must pay taxes on the income that he earns. The first $15,000 that he earns is exempt from taxation. However, on every dollar that he earns above $15,000, he faces a marginal tax rate of 15% (so for every $1 that he earns above $15,000 he must pay the government $.15). a) Putting hours of leisure on the x-axis and cans of soup on the y-axis illustrate Barry’s budget set. Be sure to label (put the coordinates) on both intercepts and the “kink” point on the budget line. b) Barry is a typical American worker who works 2000 hours per year. What are Barry’s total tax payments? Illustrate an indifference curve through his best bundle in your diagram for part (a). The President’s Tax Reform Panel proposes to change the tax laws. First, the government should lower the level…
← → X VD C Calculate the income tax for a single person who has $81,396 of taxable income using the table below which shows the tax brackets for 2016 for single workers. TODE EQ Taxable Income $0 to $9,375 $9,376 to $37,550 $37,551 to $90,850 $90,851 to $189,500 $189,501 to $411,650 $411,651 to $414,500 $414,501 or more Answer to the nearest penny. Tax Rate 12% of amount over $0 $945 plus 16% of the amount over $9,375 $5,278 plus 26% of the amount over $37,550 $18,526 plus 29% of the amount over $90,850 $46,592 plus 34% of the amount over $189,500 $119,622 plus 36% of the amount over $411,650 $120,135 plus 40.2% of the amount over $414,500 hp
If an economy's income is completely equally distributed, then the value of its Gini coefficient is income is completely unequally distributed, then the value of its Gini coefficient is 0; infinity 0; 1 1;0 infinity ; 0 If an economy's Suppose the Gini coefficient in Canada is 0.05, and the Gini coefficient in the United States is 0.42. Which country's income distribution is more evenly distributed? Canada Canada and the United States have the same income distribution. the United States More information is needed to answer this question.
A group of 10 people have the following annual incomes: 55,000,30,000,15,000,20,000,35,000,80,000,40,000,45,000,30,000,50,000. Calculate the share of total income each quintile of this income distribution received. Do the top and bottom quintile s in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution for 2005?
Laura earns a base salary of $50,000 as an event planner and is subject to the following hypothetical income tax bracket. Laura is considering taking on an additional wedding that will increase her income by $5,000. In order for Laura to deem the wedding worth her time, it must earn her $3,000 after taxes. Please round all answers to two decimal places. Income Tax rate $0-$10,000 5% $10,001-$30,000 10% 20% $30,001-$50,000 $50,001+ 50% What is the marginal tax rate associated with taking on this wedding? 50 What is Laura's average tax rate if the extra wedding is accepted? 0.1636
Calculate the value of factor income to abroad if factor income from abroad is $60 million and the net factor income from abroad is -20
3. An income tax. Suppose the U.S. Congress decides to levy an income tax on both wage income and capital income. Instead of receiving wL+rK =Y, consumers receive (1-7)wL+(1-7)rK = (1-7)Y. Trace the consequences of this tax for output per worker in the short and long runs, starting from steady state.