Citizens in the land of Notax (a country in another parallel universe!) Are citizens who are not taxpayers (have never paid income tax), face a wage rate in that country of NOX1 10 / hour. In addition, residents of Notax also do not receive any transfer of income from their government and are free to determine the working hours they wish to allocate in the labor market. It is assumed that residents of Notax have different preferences as well as preferences for their consumption and leisure time. The regime governing Notax is considering submitting a proposal to the entitled "Taxes and Expenditures" (Pakja). With the Pakja tax system where the community will bear an income of 20% for every NOX wage received by workers. At the same time is also the system whereby the government will provide a transfer to each resident of NOX 100 as real non-wage income. a. Describe in detail the curves of the budget constraints faced by workers in the country of Notax today and also the conditions that might occur if Pakja's draft passes in the parliamentary session for implementation. Assume that market wage rates will not be affected by this change in policy. b. Discuss whether the Pakja proposal would cause Notax residents to choose to work more, less or the same
Citizens in the land of Notax (a country in another parallel universe!) Are citizens who are not taxpayers (have never paid income tax), face a wage rate in that country of NOX1 10 / hour. In addition, residents of Notax also do not receive any transfer of income from their government and are free to determine the working hours they wish to allocate in the labor market. It is assumed that residents of Notax have different preferences as well as preferences for their consumption and leisure time. The regime governing Notax is considering submitting a proposal to the entitled "Taxes and Expenditures" (Pakja). With the Pakja tax system where the community will bear an income of 20% for every NOX wage received by workers. At the same time is also the system whereby the government will provide a transfer to each resident of NOX 100 as real non-wage income.
a. Describe in detail the
b. Discuss whether the Pakja proposal would cause Notax residents to choose to work more, less or the same.
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