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What happens to point g> Draw the new consumption possibilities locus, and explain what happens to the portfolio allocation.
Analyze what happens if a tax is imposed on the returns to capital whether received by Americans or by foreigners.
Describe the distortions and inequity associated with an unindexed tax system in the presence of deflation.
Which affects Karl's consumption of beer more: a one dollar increase in PH or a one dollar increase in PB? Denote the price of hamburger by PHand of beer by PB.
Discuss the arguments for and against using a tax credit rather than a deduction for: medical expenses, charitable contributions, and child care expenses.
Which treatment do you think is appropriate? Under both the old and the new tax law, money received by lottery winners is taxable.
onsider a divorced individual who earns $26,000, has two children, pays $4800 in child care expenses. What is children's actual marginal tax rate?
Explain why federal tuition tax credits might lead states to increase the tuition they charge. What might one expect to happen in those states?
Discuss some of the controversies concerning who bears the burden of the corporation income tax.
Discuss the problems that arise when the corporation tax rate exceeds the highest personal income tax rates by a substantial amount
When the company pays executives directly, the wages are deductible from to the firm's income subject to the corporate income tax; the costs of stock?
Why might such a proposal be desirable? Would it completely resolve the problems that it is intended to address?
Under what circumstances might these two differ significantly? Are there any circumstance in which you be particularly concerned about what average tax rate is?
Compare the present discounted value of taxes an individual who is the sole owner of a corporation that has $1 million in profits would pay under the scenarios.
If the two were in the same tax bracket, what would be the consequences of these imputed interest payments and receipts? If they were in different tax brackets?
Can you think how you could use a straddle to postpone taxes? Prior to 1986, long-term capital gains were taxed much more lightly than short-term capital gains.
Describe the tax savings for someone in the 28 percent marginal tax bracket who owns a business with $10,000 in profits.
Citizen groups that monitor taxes paid by different corporations often complain about the low average tax rates. Who may really benefit from such leasing?
Who benefits from the fact that state and municipal bonds are tax-exempt-the buyer of the bond, or the municipality that issues them?
The return on the amount in the savings program accumulates free of tax-just like an IRA. Explain how insurance can be used as a tax avoidance device.
Which assets are likely to decrease in value? Which to increase in value? Should the government do anything to compensate the losers or to tax the gainers?
Discuss the inequities and inefficiencies that would arise from a consumption tax which had increasing marginal tax rates but no provisions for averaging years.
What differences in individual or family circumstances should the social security program recognize?
To what extent could the purposes of the social security program be served by a law requiring individuals to purchase retirement insurance from a private firm?
Are there any theoretical reasons why social security might be expected to increase savings? Why might a tax on interest income lead to later retirements?