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Highest ever marginal income tax rate

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Reference no: EM131257540

The highest ever marginal income tax rate in the US occurred in 1944 and was about94%.

(a) Is this tax rate higher or lower than t∗?

(b) Can you believe how high this number is?

(c) Calculate G(.94) in the model. Find a tlow such that G(tlow) = G(.94).

(d) How much better off do you think households are with t = .94 rather than tlow?

Reference no: EM131257540

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