Consider an individual who received a tax cut applied to labor market earnings (e.g., tax applied to
Question:
Consider an individual who received a tax cut applied to labor market earnings (e.g., tax applied to the employee’s paycheck wage).
We are talking about two different tax levels for the same person, e.g.,
• Before the tax cut: tax rate = 30%
• After tax cut: tax rate = 15%
Evaluate, discuss and explain the labor supply response, choices of hours work, of the individual in Scenario A above, who received the above tax cut. Consider the below scenarios:
Scenario1: over the course of a work day, week, or perhaps year.
Scenario2: over the life cycle, using the dynamic life-cycle model
For each Scenario1 and Scenario 2, discuss, evaluate and explain the impact of a permanent tax cut versus a transitory (unanticipated, one-time) tax cut on labor supply decision for the above individual.
(Explain with words + graph)
International Business Law And Its Environment
ISBN: 9781305972599
10th Edition
Authors: Richard Schaffer, Filiberto Agusti, Lucien J. Dhooge