The income tax rate on all forms of income is 40 percent and there is a tax
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The income tax rate on all forms of income is 40 percent and there is a tax of 10 percent on all consumption expenditure. The nominal interest rate is 7 percent a year and the inflation rate is 5 percent a year. What is the size of the tax wedge on wages and what is the true tax rate on interest?
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The tax wedge on wages is the sum of the income tax rate and the tax rate on consumption So the tax ...View the full answer
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