Question: Peters earnings are taxed at a rate of 15 per-cent by the personal income tax and at a combined rate of 7.45 percent by the Social Security and Medicare payroll taxes. Suppose that if Peter becomes unemployed, unemployment insurance replaces 50 percent of his before-tax earnings. Recall that Ul is subject to the income but not the payroll tax. What percent of Peters after-tax income is replaced by UI? What are the implications for the effects of UI on unemployment?