How does making child care costs tax-deductible reduce the “tax wedge” associated with the fact that market work is taxed but home work is not? Does making child care costs deductible increase or decrease social efficiency?
Answer to relevant QuestionsSuppose that you can earn $16 per hour before taxes and can work up to 80 hours per week. Consider two income tax rates, 10% and 20%. a. On the same diagram, draw the two weekly consumption–leisure budget constraints ...The National Bureau of Economic Research’s TAXSIM model (http://www.nber.org/ ~taxsim/taxsim-calc8/) allows you to calculate tax liabilities for a given individual in different years. Go to this Web site and fill in the ...Shiz University has introduced a new plan that allows employees to deduct after-tax money automatically from their paychecks to be deposited in a pension plan. Why might people participate in this plan when there are no ...Consider a model in which individuals live for two periods and have utility functions of the form U = ln(C1) + ln(C2). They earn income of $100 in the first period and save S to finance consumption in the second period. The ...When Bill died in 2006, he left his children $200,000 in cash (generated from labor earnings), a $1.1-million-dollar home he had purchased (with labor earnings) for $100,000 in 1980, and $1.2 million in stock that he had ...
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