Scenario 20-1 Suppose That a Society Is Made Up of Five Families

question 300

Multiple Choice

Scenario 20-1
Suppose that a society is made up of five families whose incomes are as follows:
$120,000; $90,000; $30,000; $30,000; and $18,000.
The federal government is considering two potential income tax plans:
Plan A is a negative income tax plan where the taxes owed equal 1/3 of income minus $20,000.
Plan B is a two-tiered plan where families earning less than $35,000 pay no income tax and families earning more than $35,000 pay 10% of their income in taxes. The income tax revenue collected from those families earning over $35,000 is then redistributed equally to those families earning less than $35,000.
-Refer to Scenario 20-1.Assuming that utility is directly proportional to the cash value of after-tax income,which government policy would an advocate of liberalism prefer?

• A) Plan A
• B) Plan B
• C) either Plan A or Plan B
• D) neither Plan A nor Plan B because any plan that forcibly redistributes income is against the philosophy

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Definitions:

Self-conscious Emotions

Emotions that involve reflection on oneself, such as embarrassment, pride, shame, and guilt.

Stress

A physical or psychological response to internal or external pressures, challenges, or threats.

Social Referencing

The behavior in which individuals look to others in their environment to seek clues for how to react or behave in certain situations or towards novel objects.

Infant

A very young child or baby, typically under one year old.