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Discuss the following questions in your own words
Discuss the following questions in your own words. For each part (a, b) you should write around 7-10 sentences, typed with a word processor. a) [10 points] Why do most governments have a tax and transfer system, that taxes income and provides support for low income households? Why does the optimal tax formula depend on ? and e, what do these two parameters capture? Why is it that even a government that cares a lot about redistribution would not set a 100% tax rate? b) (10 points] Based on the assigned reading (Piketty and Saez, 2007): What does it mean for a tax system to be progressive? Does the US currently have a progressive tax system? Has it become more or less progressive over time? c) [10 points] In your own opinion, what do you think the top marginal tax rate should roughly be and why? There is nor right or wrong answer, but you need to explain and provide reasons for your answer.
Expert Solution
GOVERNMENT'S TAX AND TRANSFER SYSTEM:
- A TAX is acompulsory financial charge,whisch is levied on a taxpayer.
- it is consist of direct and indirect tax.
- the first knosun taxation is took place in ANCIENT EGYPT around 3000-2800 bc.
- most countries have a tax system to pay for public,common,agreed national needs and government functions.
- countries are subunits of wealth tax,estate tax
property tax,sales tax
payroll tax,tariff.
- A TRANSFER payment is a one way payment to an organisation.
- it refers to exchange for a product or service.
- it isused to describe government payments mainly through---welfare,student grants
social security.
- in US social security and unemploynment insurance are common types of transfer payments.
???????SO THESE ARE THE SOME INFORMAION ABOUT GOVERNMENT'S TAX AND TRANSFERS......
LOW INCOME HOUSEHOLD:
- IT IS SHORTLY DENOTED AS LIHTC.
- it provide3s an incentive for home devolopers.
- to low icome tax payers for the needs like building home,buying things.
- it is the tax reform act oh 1986.
- it is used for housing projects including maximum income guidelines.
- a project must commit to renting to tenants earning less on average
- meadian income in the area of 15 period.
THEREFORE THIS IS THE LOW INCOME HOUSEHOLDING BY THE GOVERNMENT......
OPTIMAL TAX THEORY:
- It s a study of designing and implementing a tax.
- it is required to fund the provision of public goods.
- the optimisation problem involves minimising the DISTORTIONS caused by taxation.
???????RAMSEY,S OPTIMAL FORMULA:
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INCOME REDISTRIBUTION:
- IT IS AN ECONOMIC PRACTISE.
- it is aimed at leveling the distribution of wealth or icomes.
- government abopt economic policies and strategies like PROGRESSIVE TAXATION.
- IT DOES NOT TAKE AWAY THE HARD EARNED PROPERTIES OF PEOPLE.
- the main example for income redistribution is PROGRESSIVE TAX SYSTEM.
- OVER THE year it is not only done by the government alone.
- also by some of the organisations.
???????SO THESE ARE THE FUNCTIONS MADE BY THE GOVERNMENT RAGARDING REDISTRIBUTION......
TOP MARGINAL TAX RATE:
- ???????IN 1932 THE TOP MARGINAL TAX RATE is increased to 63% .
- IN 1944 THE TOP MARGINAL RATE INCREASED TO 94%.
- The maximum marginal tax rate in india is 42.744 %.
- it is calculated on the basis of our income.
According to me marginal tax rate is increasing year by year.itb is from 5% to 30
%.our firsst part of the tax rate ensured at 20 percent tax.
THEREFORE THESE ARE THE INFORMATONS GIVEN BY THE GOVERNMENT REAGARDING TAX,TRANSFERS,MARGINAL RATE,OPTIMAL TAX RATE,LOW INCOME HOUSE HOLDINGS ETC......
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