Briefly explain why payroll taxes are a regressive tax.
What will be an ideal response?
Payroll taxes, the second most important source of income for the federal government, are actually regressive taxes, when considered alone. That is, they take a greater proportion of the income of lower-income groups than of higher-income groups. The reasons for this are simple. FICA, for example, is imposed as a fixed proportion (15.3%) of wage and salary income up to $128,400 as of 2018. Also, wealthy persons have relatively more income from sources such as dividends and interest that are not subject to payroll taxes.
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At full employment there still exists some unemployment because
A) some portion of our population will always be too lazy to work. B) there are always people too old or young to be in the labor force. C) the U.S. economy is constantly creating and destroying jobs. D) it is unnatural to have all people work 40 hours per week. E) real GDP can never exceed potential GDP.
The U.S. personal savings rate for the first quarter of 2012 dropped to its lowest level since the start of the recession. Americans stashed away 3.6 percent of personal income in the first quarter, down from 4
2 percent in the fourth quarter and a near-term peak of 6.2 percent in the second quarter of 2009. Which of the following could explain this drop in savings? A) a decrease in wealth from a fall in stock prices B) a rise in the real interest rate C) an increase in disposable income as the job market recovers D) a rise in consumer confidence that their incomes will be higher in the future
On an afternoon that a class meets, you could alternatively study for an exam that will take place in another class the next morning, go to a movie with a friend, or, most desirable to you at present, take a nap
The opportunity cost of attending the afternoon class is A) forgoing the nap. B) missing seeing the movie with your friend. C) giving up the time to study for the next morning's exam. D) being unable to engage in all three of the above activities.
A negative income tax program provides a simple way to assist the unemployed
a. True b. False Indicate whether the statement is true or false