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Chapter 8 HMWK

Give an example of a tax that you have paid in the past.  Pretend for a moment you are a member of the group considering imposing this tax (city council, state legislature, etc).  Give three reasons from the text to impose the tax.  Give three reasons not to impose it. What would the economic theory from this section of the course have to say about your tax? Will it raise much revenue? Will it change purchase decisions?
OR
Pick a concept from the chapter and summarize it in a single word.  In a paragraph, explain why the word you chose summarizes or describes the concept.




I have paid federal income tax every year. At the moment, I am pretty close to the line where my bracket could change from 12% to 22%. But because I would just barely cross that line, it would be more worth it for me to put aside those pre-tax dollars into a health savings account or a retirement account and thus be able to stay in the lower bracket than to seemingly have more take-home pay just to have it all (and more) taken away by Uncle Sam. Or, with finances in order, I could decide to not work as many hours either.

From legislators' view, here are some things that they may have considered when developing this tax.

Reasons to impose the tax:
1) Pursue equality in society by redistributing income to boost welfare
2) Ensure government revenue streams since most people have to work to survive
3) Create a way to incentivize certain lifestyles by giving tax breaks


Reasons to not impose the tax:
1) It creates an incentive to not work as much as possible
2) Money paid towards income tax is money that is no longer circulating in the local economy, reducing the growth of business
3) Imposing a tax alters the way people make decisions

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