Briefly explain why payroll taxes are a regressive tax.
What will be an ideal response?
Payroll taxes, the second most important source of income for the federal government, are actually regressive taxes, when considered alone. That is, they take a greater proportion of the income of lower-income groups than of higher-income groups. The reasons for this are simple. FICA, for example, is imposed as a fixed proportion (15.3%) of wage and salary income up to $128,400 as of 2018. Also, wealthy persons have relatively more income from sources such as dividends and interest that are not subject to payroll taxes.
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If currencies around the world are based on the gold standard, and the EU lowers the amount of gold for which the euro will trade, then holding all else constant,
A) the euro will depreciate against the dollar. B) the value of U.S. exports to EU countries in terms of the euro will decrease. C) the value of the euro relative to the dollar will stay constant. D) the euro will appreciate against the dollar.
Selling a product at different prices when the price difference is unrelated to costs is a practice known as
A) price fixing. B) price monopolization. C) price discrimination. D) price differentiation.