Some politicians have recently suggested changing the income tax system in the U.S. to a flat tax system where all taxpayers would pay the same percentage of their income in tax to the federal government
Explain how such a change can be analyzed in terms of efficiency. Do you believe that this tax will have equity effects as well?
The flat tax will lower the cost of filing taxes for taxpayers and therefore increase the efficiency of government financing. However, this will place a larger tax burden on the poor than currently exists which may lead to some equity concerns.
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Of the three major economic questions, which of the following is the best example of a "How?" question?
A) Should we produce more heavy fleece coats? B) Should we spend more on health care? C) Should we collect tolls on turnpikes using human toll collectors or mechanized toll machines? D) Should we eat more oatmeal? E) Should we build log homes or build factories from bricks?
Which of the following policies would not prevent the Social Security trust fund from running out of assets?
A) Reduce promised benefits B) Reduce taxes C) Increase taxes D) Earn a higher rate of return