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Assume the opposition political party's main election campaign mandate is to increase the personal income tax rate for higher-income earners.

a) What is the name of this type of government policy?

b) How will this policy affect income distribution and economic growth?

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Sonal Bahl
Sonal BahlLv10
29 Sep 2019

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Related questions

Match following policy choices with each one's policy preference.

Policy Choice

Policy A. Automatic Stabilizers such as SNAP

Policy B. Income tax cut

Policy C. American Recovery Reinvestment Act (ARRA) in 2009, which spent $500 billion, including infrastructure spending.

Policy D. Earned Income Tax Credit (EITC)

Policy Preference

a. Leela is a proponent of active stabilization policy. She would support _____ because it has little time lags.

b. Fry is an opponent of active stabilization policy. He would support _____ during a recession because it would increase aggregate demand.

c. Bender is an opponent of active stabilization policy, especially believes in a small government. He would support _____.

d. Hubert believes in providing the right incentive. He would support ____ because it provides a tax credit to low to moderate-income earners so that it gives the incentive to earn more rather than staying poor.

Question: Please pick your answer choice and explain why/how your answer choice is correct.

A longstanding issue in economics is how income taxes affect government revenue. Proponents of increasing income taxes say that taxing citizens at a higher rate will increase government tax revenue since you are collecting more from each person. Doubters of this policy say that increasing income taxes causes people to find ways to avoid tax or causes citizens to work less, ultimately reducing the tax rate. Given this economic issue, suggest primary and secondary data sources that one could use to test this hypothesis.

Please provide three examples for primary data sources and three examples for secondary data sources that can be used to test this hypothesis correctly. Explain why the selected data sources are appropriate for the topic.

A. The government deficit:

a. Measures the difference between the amount governments spend and the amount it collects in tax revenues in a given period.

b. Is much higher than government debt.

c. Is the total amount of money a government owes at a particular point in time.

d. Is essentially the same as government debt.

Ā 

B. To close a recessionary gap by employing fiscal policy, the government could:

a. Lower the annual income exempt from paying the personal income tax.

b. Increase national savings so that the interest rate falls.

c. Lower the corporate income tax rate.

d. Lower the amount of unemployment insurance benefits.



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