question archive The government introduces an income tax with the following tax scale: Marginal tax rate Threshold 0 per cent Up to $10,000 20 per cent From $10,001 to $40,000 40 per cent From $40,001 to $120,000 60 per cent From $120,001 1 Calculate the marginal and average tax rates for the following incomes: 1 $7,000 2 $20,000 3 $45,000 4 $140,000 2 Is the tax system proportional, progressive or regressive? Discuss The government decides to introduce a means tested transfer for low income individuals of $2,000 (the payment is not subject to tax) The payment phases out at a rate of 50 cents for each $1 earned above $43,000 3 After which income level will the payment is no longer available (ie at what income level is the payment completely phased out)? 4 Calculate the (combined) marginal and average tax rates for the following individuals: 1 $7,000 2 $20,000 3 $45,000 4 $140,000 5 Is this tax-transfer system proportional, progressive or regressive? 6 Discuss briefly what impact the low income payment may have on labour supply 7 Discuss the importance of considering both the tax and transfer system when evaluating tax policy?
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The government introduces an income tax with the following tax scale:
Marginal tax rate Threshold
0 per cent Up to $10,000
20 per cent From $10,001 to $40,000
40 per cent From $40,001 to $120,000
60 per cent From $120,001
1 Calculate the marginal and average tax rates for the following incomes:
1 $7,000
2 $20,000
3 $45,000
4 $140,000
2 Is the tax system proportional, progressive or regressive? Discuss The government decides to introduce a means tested transfer for low income individuals of $2,000 (the payment is not subject to tax) The payment phases out at a rate of 50 cents for each $1 earned above $43,000
3 After which income level will the payment is no longer available (ie at what income level is the payment completely phased out)?
4 Calculate the (combined) marginal and average tax rates for the following individuals: 1 $7,000 2 $20,000 3 $45,000 4 $140,000 5 Is this tax-transfer system proportional, progressive or regressive?
6 Discuss briefly what impact the low income payment may have on labour supply
7 Discuss the importance of considering both the tax and transfer system when evaluating tax policy?