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In: Accounting

Suppose Hilary is a single parent with one child, and she is trying to determine the...

Suppose Hilary is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Hilary resides.

Compute the spendable income level Hilary would have at each level of earned income, and enter these values in the last column.

Earned Income from Work

Transfer Benefits

Income and Employment Taxes

Spendable Income

(Dollars)

(Dollars)

(Dollars)

(Dollars)
0 9,498 0 9,498
6,000 8,704 320
12,000 7,338 848
18,000 5,554 1,423
24,000 2,280 2,124
30,000 1,303 2,894

If Hilary's income from work increased from $18,000 to $24,000, her implicit marginal tax rate would be   .

If Hilary's income from work increased from $24,000 to $30,000, her implicit marginal tax rate would be   .

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Expert Solution

ekkarill92 answered 1 year ago
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