Congress would like to increase tax revenues by 5.5 percent. Assume that the average taxpayer in the United States earns $56,000 and pays an average tax rate of 20 percent. Required: If the income effect is in effect for all taxpayers, what average tax rate will result in a 5.5 percent increase in tax revenues? Note: Round your answer to 2 decimal places.
Congress would like to increase tax revenues by 5.5 percent. Assume that the average taxpayer in the United States earns $56,000 and pays an average tax rate of 20 percent. Required: If the income effect is in effect for all taxpayers, what average tax rate will result in a 5.5 percent increase in tax revenues? Note: Round your answer to 2 decimal places.
Chapter22: The Public Sector
Section: Chapter Questions
Problem 4SQ
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Transcribed Image Text:Congress would like to increase tax revenues by 5.5 percent. Assume that the average taxpayer in the
United States earns $56,000 and pays an average tax rate of 20 percent. Required: If the income effect
is in effect for all taxpayers, what average tax rate will result in a 5.5 percent increase in tax revenues?
Note: Round your answer to 2 decimal places.
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