Suppose that Sharlene faces a marginal income tax rate of 35 percent, and if she cheats on
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Suppose that Sharlene faces a marginal income tax rate of 35 percent, and if she cheats on her taxes, there is a 2 percent chance that she will be caught. Suppose also that the marginal penalty of tax evasion is 10R, where R is the amount of unreported income (in thousands of dollars). How much income will Sharlene fail to report?
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The marginal benefit of underreporting is equal to the taxe...View the full answer
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Related Book For
Public Finance In Canada
ISBN: 9781259030772
5th Canadian Edition
Authors: Harvey S. Rosen, Ted Gayer, Jean-Francois Wen, Tracy Snoddon
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