Question

can you please solve this for me.

please write a paragraph for each question and explain your reasoning.

1) assume that you are a full-time worker earning $10/hour, $80/day, $400/week, $20000/year. would you be willing to quit your jobs or keep working if the tax rate was 10%? 20%? 30%? 40%? what do you think is the best tax rate?

what do you think is the best tax rate?

2)the state of California has decided to increase funding for public education. they are considering four alternative taxes ti finance these expenditures. all four taxeswould raise the same amount of revenue.

a. A sales tax on food

b. A tax on families with school age children

c. A property tax on vacation homes

d. A sales tax on jewelry

taxes change incentives. how might individuals change their behavior because of each of these taxes? rank these taxes from smallest deadweight loss to largest deadweight loss. explain . is deadweight loss the only thing to consider when designing a tax system?

Answer 1

1. We would keep working if tax rate will be 10%. As it is the minimum tax rate so it is the best tax rate. We can pay easily pay this tax and the tax burden will be less as we have to pay only 10% of $20000/year means $2000. So net income will be $18000.
2. Individuals can change their behaviour because of each of these taxes as follows:

• A sales tax on food – it will decrease consumption of food items
• A tax on families with school age children – will reduce their expenditure and it might affect their education expenditure.
• A property tax on vacation homes : will reduce demand for vacation homes
• A sales tax on jewelry : will reduce demand for jewelry

Rank – smallest to highest dead weight loss:

1. A property tax on vacation homes
2. A sales tax on jewelry
3. A tax on families with school age children
4. A sales tax on food

               Dead weight loss is an important thing to consider when designing a tax system but not the only thing.