Skip to main content

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

Comments

Post a Comment

Popular posts from this blog

Chapter 22 Reflection

Inflation and unemployment have an inverse relationship. You can ’t have both become lower at the same time, but policymakers can decide acceptable threshold levels which will then inform which is more of a priority to pursue. It is good that people work at jobs, because then the GDP rises, which improves the nation’s economy as they become more efficient. But you see, a s more people get jobs, their income rises, and then their consumption also increases. Increased consumption means that prices generally rise as the goods go to the highest bidder. Workers in turn will demand higher wages in order to keep up with these rising prices, or inflation. So in the end, as unemployment decreases inflation will increase. I ’m not so sure that there really is a trade-off, as it seems to be more of a feedback cycle rather than something that can be legislated. And this feedback cycle seems to have a historic pattern as well. But overall, neither factor alone totally conveys the quality o...
Post a Comment
Read more

Chapter 17 Reflection

Inflation is an increase in the money supply. Prices appear to become higher because currency loses its value, so it requires more money to buy the same item. People may begin to hoard groceries in order to get the most bang for their buck. This can create a feedback loop as people seek to spend their earnings rather than allow it to depreciate. Deflation is a constriction of the money supply. Prices appear to become lower, and people may delay their purchases in order to save money... so the economy stagnates. In addition, consumers have less disposable income after they have paid for the necessities because their wages are typically smaller. If wages are smaller, then any pre-existing debt becomes more difficult to pay off. This can be a dangerous position because the USA's economy increasingly relies on debt.
Post a Comment
Read more

Chapter 18 Reflection

Seeing how the flow of goods and services is related to the flow of capital in international markets is interesting. Selling a good to a foreign party increases your exports, and when you buy foreign products with the foreign currency you have received you are increasing imports. The question of whether domestic citizens or foreign people are investing more heavily will determine whether there is a trade surplus or deficit. But this is a multi-faceted label, and more factors must be observed in order to determine how it affects a nation's well-being. I'm curious to know more about the economic changes that occurred when the EU countries initially adopted the Euro. How did the differing exchange rates determine how many Euros each country would be given? How did that affect their ability to grow?
Post a Comment
Read more