Each of the following tax proposals has income as the tax base. In each case, calculate the
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b. All income up to $10,000 is tax-free. All income above $10,000 is taxed at a constant rate of 20%.
c. All income between $0 and $10,000 is taxed at 10%. All income between $10,000 and $20,000 is taxed at 20%. All income higher than $20,000 is taxed at 30%.
d. Each individual who earns more than $10,000 pays a lump-sum tax of $10,000. If the individual's income is less than $10,000, that individual pays in taxes exactly what his or her income is.
e. Of the four tax policies, which is likely to cause the worst incentive problems? Explain.
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