Write down a formula for the average tax rate as a function

Assignment Help Finance Basics
Reference no: EM131490556

Question: Assume that in a given country, tax revenues, T, depend on income, I, according to the formula

T = - 4,000 + 0.21

Thus, for example, when a household has an income of $50,000, its tax burden is -4,000 + 0.2 X 50,000, or $6,000. Is this a progressive tax schedule? Now let's generalize the tax schedule in this problem to:

T= a + tI

where a and t are numbers. (For example, in the tax schedule above, a = -4,000 and t = 0.2.) Write down a formula for the average tax rate as a function of the level of income. Show that the tax system is progressive if a is negadve, and regressive if a is positive.

[Hint: The aver-age tax rate is TH.]

Reference no: EM131490556

Questions Cloud

Sky diver steps from a hight-flying helicopter : A sky diver steps from a hight-flying helicopter. If there were not air resistance, how fast would she be falling at the end of a 12 second jump?
Evaluate marginal tax rate at each persons current income : Suppose that the income tax in a certain nation is computed as a flat rate of 5 percent, but no tax is levied above $50,000 in taxable income.
Enhanced sense of hearing versus : What might be the advantages and disadvantages of having an enhanced sense of hearing versus that of sight?
What type of treatment is available for the patient : What type of treatment is available AND what is the outcome/life expectancy for the patient under normal circumstances if treatment is sought?
Write down a formula for the average tax rate as a function : Assume that in a given country, tax revenues, T, depend on income, I, according to the formula T = - 4,000 + 0.21.
What are the applications in daily life : Discuss the characteristics of the fourth state of matter: plasma. What are the applications in your daily life?
How will this affect tax revenues for new york city : In 2002, New York City increased the tax ram on cigarettes from S cents a pack to $1.50 a pack. A month after the increase, a spokesman for the mayor noted.
Write assignment about international business : Write assignment about International business 2000 words with Harvard referencing - Discuss the two types of trade flow that underlie the recorded growth
Discuss the possible incidence of a tax on cigarettes : A New York Times editorialist recently advocated a cut in the payroll tax. Among other advantages. he argued that it would "stimulate hiring. since employers.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd