Many Americans believe that taxes have been gobbling up an ever-increasing share of the U.S. economy. Is this observation correct? Explain.
What will be an ideal response?
Available data suggests that the share of federal taxes in GDP was rather steady from the early 1950s until around 2000. It climbed from less than 4 percent in 1929 to 20 percent during World War II, fell back to 15 percent in the immediate postwar period, and fluctuated mainly in the 18 to 21 percent range until the Bush tax cuts pushed it down below 17 percent. More recently, it declined to 16 percent as a result of the 2007–2009 recession. The share of GDP taken by state and local taxes climbed substantially from World War II until the early 1970s. But since then it, too, has remained remarkably stable—at about 10 to 11 percent. The shares of GDP taken in taxes by the federal, state, and local governments have been approximately constant for about 40 years.
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A tax system in which the tax rate on everyone's first $10,000 of income is 10 percent, the tax rate on everyone's second $10,000 of income is 15 percent, and the tax rate on all income over $20,000 is 25 percent is a(n):
a. proportional tax. b. equitable tax. c. head tax. d. unit tax. e. progressive tax.
The four sources of income for the household are
a. taxes, subsidies, imports, interest b. taxes, interest, rent, rebates c. interest, rebates, rent, taxes d. wages, taxes, imports, interest e. wages, rent, interest, profits
A trade surplus provides a measure of the gap between exports and imports
a. True b. False Indicate whether the statement is true or false
Economists regard expenditures on education as investments because:
A. they are subject to tax deductions at the same rate as are expenditures on machinery and equipment. B. education is economically beneficial at the same time it is being acquired. C. such expenditures are current costs that are intended to enhance future earnings. D. they differ from expenditures on health and worker mobility.