Is the difference in the increase in money taken from the rich and the reduction in money taken from the poor a good measure of the redistributive impact of a progressive income tax system? Why or why not?
What will be an ideal response?
No, it is not a good measure of the redistributive impact of a progressive tax system because it overstates the amount of redistribution. This is because a progressive tax system will increase the pre-tax wages of high income workers and reduce the pre-tax wages of low-income workers. The result will be a lowering of the redistributive impact of progressive taxation.
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When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic
Indicate whether the statement is true or false
Which of the following is a practical question to implementing Keynesian economic policies to stimulate the economy?
a. Does the government know whether it is better to increase spending or increase taxes? b. Does the government know whether it is better to cut spending or cut taxes? c. Does the government know when there is cyclical unemployment? d. Does the government accurately know what the country’s potential GDP is?
If an economy keeps increasing its capital stock, then over time its production possibilities curve will
a. remain unchanged but more capital goods will be produced b. shift outward c. shift inward d. disappear because scarcity will eventually be overcome e. remain unchanged, but production will occur outside (exterior to) the curve
You have a choice among three options. Option 1: receive $900 immediately. Option 2: receive $1,200 one year from now. Option 3: receive $2,000 five years from now. The interest rate is 15 percent. Rank these three options from highest present value to lowest present value
a. Option 1; Option 2; Option 3 b. Option 3; Option 2; Option 1 c. Option 2; Option 3; Option 1 d. Option 3; Option 1; Option 2