ch08_01_taxes

# ch08_01_taxes - Bade/Parkin Microeconomics Chapter on Taxes...

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Bade/Parkin - Microeconomics - Chapter on Taxes A couple of notes. There is one quiz/test question that looks like this. (Also see end-of-chapter exercise #10). The first question asks about the first line of the setup. Thus, Leo’s average tax is (\$12,500 divided by \$25,000) times 100, or 50 percent. I don’t know why the program wants this, but please MAKE SURE that you type in your answer as “0.500 * 100” percent, NOT “50 ” percent. By the time you read this, this may have been corrected. Certainly the first time you take the quiz you can try “50” but if you get an error message use “0.500 * 100”. The second question asks about the second line of the setup. Thus, Leo’s marginal tax rate is
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Unformatted text preview: (\$60 divided by \$100) times 100, or 60 percent. A second issue concerns the question below. This is similar to the 8.3 section problem #1. The conceptual information you need comes from sections 8.1 (regarding efficiency) and 8.3 (regarding ability-to-pay and fairness). The numerical information you need (for the United States) is in section 8.2, namely in the table in figure 8.5 on p. 197. (Specifically, U.S. marginal tax rates range from 10 to 35 percent.) Thus, Spain places GREATER weight on the ability-to-pay principle, LESS weight on efficiency, and GREATER weight on fairness....
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