Suppose that the government has a wealth tax at the rate of 2% on the assessed...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Suppose that the government has a wealth tax at the rate of 2% on the assessed value of wealth. Suppose that Wendy has invested all her wealth in a private corporation. Her wealth amounts to $4,000,000 in shares of this company. Suppose that this stock delivers a dividend income of $200,000 per year. Assume there is no inflation and that interest rates are 3%. Show your work. 1. Wendy's wealth tax liability is S 2. Wendy's shares generate a net of tax income is $_ per year. 3. Suppose a Conservative party were elected on a platform of eliminating the wealth tax. The value of Wendy's shares if the wealth tax was eliminated would be $_ 4. The elimination of the wealth tax would reduce government tax revenue and create a budget deficit. Suppose that the country currently has no income tax, but the deficit has the government considering introducing a personal income tax that would replace the lost wealth tax revenue. A personal income tax rate of % would generate the same amount of revenue from Wendy as the old wealth tax. Suppose that the government has a wealth tax at the rate of 2% on the assessed value of wealth. Suppose that Wendy has invested all her wealth in a private corporation. Her wealth amounts to $4,000,000 in shares of this company. Suppose that this stock delivers a dividend income of $200,000 per year. Assume there is no inflation and that interest rates are 3%. Show your work. 1. Wendy's wealth tax liability is S 2. Wendy's shares generate a net of tax income is $_ per year. 3. Suppose a Conservative party were elected on a platform of eliminating the wealth tax. The value of Wendy's shares if the wealth tax was eliminated would be $_ 4. The elimination of the wealth tax would reduce government tax revenue and create a budget deficit. Suppose that the country currently has no income tax, but the deficit has the government considering introducing a personal income tax that would replace the lost wealth tax revenue. A personal income tax rate of % would generate the same amount of revenue from Wendy as the old wealth tax.
Expert Answer:
Answer rating: 100% (QA)
1 Wendys wealth tax liability is 4000000 x 2 80000 2 Wendys sha... View the full answer
Related Book For
Macroeconomics Principles and Applications
ISBN: 978-1133265238
5th edition
Authors: Robert e. hall, marc Lieberman
Posted Date:
Students also viewed these economics questions
-
Suppose that the government has a budget deficit of $1 trillion. What are the real interest rate, the quantity of investment, and the quantity of private saving? Is there any crowding out in this...
-
Suppose that the government has a budget deficit of $1 trillion and the Ricardo-Barro effect occurs, what are the real interest rate and the quantity of investment? The table shows an economys demand...
-
Assume that initially the government has a balanced budget. However, to finance infrastructure investment, the government decides to increase spending. Show the effect on the loanable funds market in...
-
Suppose the weight of pieces of passenger luggage for domestic airline flights follows a normal distribution with u = 28 pounds and o = 5.7 pounds. (a) Calculate the probability that a piece of...
-
Determine the class life, MACRS recovery period, and ADS recovery period of each of the following assets: a. Barge b. Computer c. Automobile d. Breeding sheep e. Breeding horses f. Barn g. Office...
-
The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet SpA on January 1, 2013 and the subsequent interest payments and charges. The company's year-end is...
-
The December 1, bank statement of Billys Hamburger just arrived from Safety Bank. To prepare the bank reconciliation, you gather the following additional data: a. The following checks are outstanding...
-
Calculating EAR with Points you are looking at a one-year loan of $10,000. The interest rate is quoted as 9 percent plus three points. A point on a loan is simply 1 percent (one percentage point) of...
-
How are we prepared if we don't receive the right offer? Or our job has been eliminated due to organization downsizing? How prepared are you and what steps are you taking?
-
This problem continues the process of preparing the Kipley Company's Employee Payroll Register for the pay period ending January 8th, 20--. In previous chapters, gross wages were computed for each...
-
What are the next-generation sequencing technologies and their impact.
-
A binary tree is heap ordered if the key at the root is larger than the keys in all of its descendants. Implement a linear-time method heapOrdered() that returns true if the tree is heap ordered, and...
-
A connected component in a graph is a maximal set of vertices that are mutually connected. Write a Graph client CCFinder that computes the connected components of a graph. Include a constructor that...
-
Compute the value returned by mystery () on some sample binary trees and then formulate a hypothesis about its behavior and prove it. public int mystery (Node x) { } if (x==nul1) return 0; return...
-
Design a linear-time algorithm to sort an array of Comparable objects that is known to have at most three distinct values. (Edsger Dijkstra named this the Dutch-national-flag problem because the...
-
Implement the following methods, each of which takes as its argument a Node that is the root of a binary tree. Your methods should all run in linear time. int size() int leaves () double total()...
-
3. Four resistors are connected to a battery with an emf of 9.00 V (neglect internal resistance) as shown in the diagram. A switch SW1 can be in the "up," "down," or "open" position. (When it is...
-
Why is inventory management important for merchandising and manufacturing firms and what are the main tradeoffs for firms in managing their inventory?
-
In the Using the Theory section, we calculated the present value of the costs of attending a private college, with no financial aid. a. Using Table, what would have been the present value of the cost...
-
Three Guys Named Al, a moving company, is contemplating a price hike. Currently, they charge $30 per hour, but Al thinks they could get $40. Al disagrees, saying it will hurt the business. Al, the...
-
Suppose that demand is given by the equation QD = 500 50P, where QD is quantity demanded, and P is the price of the good. Supply is described by the equation QS = 50+ 25P, where QS is quantity...
-
Optimize the following Boolean functions \(F\) together with the don't-care conditions \(d\) : (a) \(F(A, B, C, D)=\Sigma m(0,1,7,13,15), d(A, B, C, D)=\Sigma m(2,6,8,9,10)\) (b) \(F(W, X, Y,...
-
+Apply the simplified Espresso algorithm to the following function. Show a K-map for each algorithm routine that changes one or more implicants. \[F(A, B, C, D)=\bar{A} \bar{B} \bar{D}+\bar{B}...
-
Illustrate the expansion or reduction performed on each implicant on a Kmap if the operation changes the implicant. (a) Apply the Espresso EXPAND routine to the following function. \[F(A, B, C,...
Study smarter with the SolutionInn App