Policy Proposal 1: Replace the existing system with a progressive tax system that would tax business and individuals, using these schedules: Business Tax Rates You Pay This Amount onPlus This Percentage on If your Taxable Income Is Up to 5,000,000 5,000,000-10,000,000 10,000,000-20,000,000 20,000,000-40,000,000 Over 40,000,000 the Base of the Bracket SRO SR500,000 SR1,250,000 SR3,250,000 SR8,250,000 the Excess over the Base 10% 15% 20% 25% 30% Personal Tax Rates You Pay This Amount on the Base of the Bracket SRO SR300 SR2,100 SR6,000 Plus This Percentage on If your Taxable Income Is Up to 6,000 6,000-24,000 24,000-50,000 Over 50,000 the Excess over the Base 5% 10% 15% 2090 Given these tax schedules, calculate the tax liabilities for the following: (NOTE: Please round the percentage values to two decimal places.) Taxpayer Tax Obligation Average Tax Rate Ferskt Fishmongers Company, which earns an income of SR25,000,000 Ferskt Fishmongers Bjork Frida Ari .The following three individual taxpayers: (1) Bjork, a beekeeper earning SR12,000 per year; (2) Frida, a cooper (barrel maker) earning SR35,000 per year; (3) Ari, a banker earning SR70,000 Assume that Bjork owes the same tax liability under both the current tax system and the proposed (progressive) system. As an economically rational taxpayer, why should he prefer the current system? Because under the progressive tax system the next sodor earned would be taxed at the rate of 10%; under the current system, it would not be subject to any tax Because under the current system the next sodor earned would be taxed at the rate of 1.2%; under the progressive system, it would not be subject to any tax Because under the progressive tax system the next sodor earned would be taxed at the highest tax rate (20%); under the current system, it would be exempt from additional taxes Policy Proposal 2: Make the interest expense paid on business loans tax-deductible What effect will this tax have on Ferskt Fishmongers? All other things equal, this tax will reduce the before-tax cost of the firm's debt compared to the comparable cost of its equity. This would tend to cause the firm to prefer to use debt financing relative to equity financing All other things equal, this tax will increase the before-tax cost of the firm's debt compared to the comparable cost of its equity. This would tend to cause the firm to prefer to use equity financing relative to debt financing This tax will increase the tax revenues received by Treasury of Rodos. Policy Proposal 1: Replace the existing system with a progressive tax system that would tax business and individuals, using these schedules: Business Tax Rates You Pay This Amount onPlus This Percentage on If your Taxable Income Is Up to 5,000,000 5,000,000-10,000,000 10,000,000-20,000,000 20,000,000-40,000,000 Over 40,000,000 the Base of the Bracket SRO SR500,000 SR1,250,000 SR3,250,000 SR8,250,000 the Excess over the Base 10% 15% 20% 25% 30% Personal Tax Rates You Pay This Amount on the Base of the Bracket SRO SR300 SR2,100 SR6,000 Plus This Percentage on If your Taxable Income Is Up to 6,000 6,000-24,000 24,000-50,000 Over 50,000 the Excess over the Base 5% 10% 15% 2090 Given these tax schedules, calculate the tax liabilities for the following: (NOTE: Please round the percentage values to two decimal places.) Taxpayer Tax Obligation Average Tax Rate Ferskt Fishmongers Company, which earns an income of SR25,000,000 Ferskt Fishmongers Bjork Frida Ari .The following three individual taxpayers: (1) Bjork, a beekeeper earning SR12,000 per year; (2) Frida, a cooper (barrel maker) earning SR35,000 per year; (3) Ari, a banker earning SR70,000 Assume that Bjork owes the same tax liability under both the current tax system and the proposed (progressive) system. As an economically rational taxpayer, why should he prefer the current system? Because under the progressive tax system the next sodor earned would be taxed at the rate of 10%; under the current system, it would not be subject to any tax Because under the current system the next sodor earned would be taxed at the rate of 1.2%; under the progressive system, it would not be subject to any tax Because under the progressive tax system the next sodor earned would be taxed at the highest tax rate (20%); under the current system, it would be exempt from additional taxes Policy Proposal 2: Make the interest expense paid on business loans tax-deductible What effect will this tax have on Ferskt Fishmongers? All other things equal, this tax will reduce the before-tax cost of the firm's debt compared to the comparable cost of its equity. This would tend to cause the firm to prefer to use debt financing relative to equity financing All other things equal, this tax will increase the before-tax cost of the firm's debt compared to the comparable cost of its equity. This would tend to cause the firm to prefer to use equity financing relative to debt financing This tax will increase the tax revenues received by Treasury of Rodos