Some economists have proposed making the tax rate progressivity depend on the wage rate rather than the income level. Thus, an individual who works twice as long as another but who receives a lower wage would face a lower marginal tax rate.
a. What effect would this change have on incentives to work?
b. Would this system be fairer than our current system? Why or why not?
c. If, simultaneously, the tax system were made regressive in hours worked so that individuals who work longer hours faced lower marginal tax rates, what effect would this change have on hours worked?