Many people have argued that an income tax should be marriage neutral, that is, two people should

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Many people have argued that an income tax should be “marriage neutral,” that is, two people should pay the same total tax whether they are married or they are single. Suppose Amanda earns nothing, Ben earns $60,000, and Cathy and Dylan each earn $30,000. They are all single.
a. Amanda pays no tax because she has no income. If they live in a country that has a progressive income tax, which will be higher: the tax that Ben pays or the sum of the taxes Cathy and Dylan pay?
b. Amanda marries Ben and Cathy marries Dylan. This country taxes married couples based on a family’s total income. Show that the newlyweds Amanda and Ben will pay the same tax as Cathy and Dylan’s family.
c. Is the income tax in this country marriage neutral?
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Microeconomics

ISBN: 978-1292079578

Global Edition 1st Edition

Authors: David Laibson, John List

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