5. Computing the implicit marginal tax rate Suppose Amy is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Amy resides. Compute the spendable income level Amy would have at each level of earned income and enter these values in the last column of the table. Earned Income from Work Transfer Benefits Income and Employment Taxes (Dollars) (Dollars) (Dollars) 0 9,883 0 5,000 8,905 406 10,000 7,013 724 15,000 5,776 1,379 20,000 2,845 2,017 25,000 1,283 2,790 Spendable Income (Dollars) 9,883 If Amy's income from work increased from $10,000 to $15,000, her implicit marginal tax rate would be If Amy's income from work increased from $15,000 to $20,000, her implicit marginal tax rate would be

5. Computing the implicit marginal tax rate Suppose Amy is a single parent with one child, and she is trying to determine the effect of transfer benefits and taxes on her implicit marginal tax rate (and thus her incentive to work). The following table shows the transfer benefits and income taxes at various income levels in the economy in which Amy resides. Compute the spendable income level Amy would have at each level of earned income and enter these values in the last column of the table. Earned Income from Work Transfer Benefits Income and Employment Taxes (Dollars) (Dollars) (Dollars) 0 9,883 0 5,000 8,905 406 10,000 7,013 724 15,000 5,776 1,379 20,000 2,845 2,017 25,000 1,283 2,790 Spendable Income (Dollars) 9,883 If Amy's income from work increased from $10,000 to $15,000, her implicit marginal tax rate would be If Amy's income from work increased from $15,000 to $20,000, her implicit marginal tax rate would be

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter15: Income Inequality And Poverty

Section: Chapter Questions

Problem 7CQ

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