Problem 2
Suppose George made \(\$ 20,000\) last year and that he lives in the country of Harmony. The way Harmony levies income taxes, each citizen must pay 10 percent in taxes on their first \(\$ 10,000\) in earnings and then 50 percent in taxes on anything else they might earn. So given that George earned \(\$ 20,000\) last year, his marginal tax rate on the last dollar he earns will be _____ and his average tax rate for his entire income will be _____. a. 50 percent; 50 percent. b. 50 percent; less than 50 percent. c. 10 percent; 50 percent. d. 10 percent; less than 50 percent.
Problem 3
The nation of Upstandia uses kroner for money and its tax code is such that a person making 100,000 kroner per year pays 40,000 kroner per year in income taxes; a person making 200,000 kroner per year pays 70,000 kroner per year in income taxes; and a person making 300,000 kroner per year pays 90,000 kroner per year in income taxes. Upstandia's income tax system is: a. Progressive. b. Regressive. c. Proportional.
Problem 4
Identify each of the following taxes as being either progressive or regressive. a. Personal income tax. b. Sales taxes. c. Payroll taxes. d. Property taxes.
Problem 5
The efficiency loss of imposing an excise tax is due to: a. Paying a higher price per unit. b. Producing and consuming fewer units.
Problem 6
True or false. The incidence of property taxes that are levied on rented houses and apartments is high-meaning that they are paid almost entirely by the landlords, who are billed by the government for those taxes.
