We introduce the role of income taxes into the Keynesian system. U.S. taxes consist of autonomous taxes
Fantastic news! We've Found the answer you've been seeking!
Question:
We introduce the role of income taxes into the Keynesian system. U.S. taxes consist of autonomous taxes and income taxes. Autonomous taxes such as sales taxes and property taxes do not depend on income, whereas income taxes such as personal income taxes and corporate income taxes depend on the level of income. When we introduce income taxes into the model, the multipliers are modified as follows:
Assuming that the U.S. MPC is 0.9, and the average income tax rate is 0.3 (30%), calculate the multipliers
The investment multiplier = 1/[1 - MPC(1 - Tax rate)].
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
Posted Date: