Our current system of federal income tax has five tax brackets, starting at 15% for income under
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Question:
Our current system of federal income tax has five tax brackets, starting at 15% for income under $48,535 for a single person, and caps out at 33% for income above $214,368. (It gets more complicated than that, but that's the simple version.) Suppose that instead of doing things this way, we tried to create a tax in which everyone pays the amount of money that would reduce the utility of their pre-tax income by (say) 10%.
What would happen to the amount that people pay, and why?
Explain your answer both for the case of someone who is currently in the lowest income bracket as well as someone in the highest. (You don't need to use exact numbers.)
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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