Many people have argued that an income tax should be "marriage neutral," that is, two people should pay the same total tax whether they are married or they are single
Suppose Amanda earns nothing, Ben earns $60,000, and Cathy and Dylan each earn $30,000 . They are all single. a. Amanda pays no tax because she has no income. If they live in a country that has a progressive income tax, which will be higher: the tax that Ben pays or the sum of the taxes Cathy and Dylan pay? b. Amanda marries Ben and Cathy marries Dylan. This country taxes married couples based on a family's total income. Show that the newlyweds Amanda and Ben will pay the same tax as Cathy and Dylan's family. c. Is the income tax in this country marriage neutral?
a. If the tax system is progressive, then the average tax rate on $60,000 is higher than the average tax rate on $30,000 . Therefore, Ben's taxes are higher than the sum of Cathy's and Dylan's taxes.
b. If the income tax in this country is based on a family's total income, then Amanda and Ben will pay the same tax as Cathy and Dylan; both families have an income of $60,000 and therefore both must pay the same in taxes.
c. The tax is not marriage neutral. Amanda and Ben paid higher taxes than Cathy and Dylan before their marriages but pay the same taxes after their marriages. Marriage must have changed the taxes for at least one of these couples. As a general proposition, it is impossible to design a tax system that (i) is progressive, (ii) bases taxes on a family's total income, and (iii) is marriage neutral.
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Evidence from the United States during the period 1973-2002 indicates that the value of the dollar and the measure of the ________ interest rate rose and fell together
A) real B) nominal C) expected D) actual
Suppose a competitive market has a horizontal long-run supply curve and is in long-run equilibrium. If demand decreases, we can be certain that in the short-run,
a. at least some firms will shut down. b. price will fall below marginal cost for some firms. c. price will fall below average total cost for some firms. d. at least some firms will enter the industry.
"Monetary policy can be described either in terms of the money supply or in terms of the interest rate.". This statement amounts to the assertion that
a. rightward shifts of the money-supply curve cannot occur if the Federal Reserve decides to target an interest rate. b. the activities of the Federal Reserve's bond traders are irrelevant if the Federal Reserve decides to target an interest rate. c. changes in monetary policy aimed at expanding aggregate demand can be described either as increasing the money supply or as increasing the interest rate. d. our analysis of monetary policy is not fundamentally altered if the Federal Reserve decides to target an interest rate.
Refer to Table 19-17. What is real GDP in 2016, using 2011 as the base year?
A) $3,320 B) $3,690 C) $6,360 D) $7,035