Scenario 20-3 Suppose That a Society Is Made Up of Five Families

question 136

Multiple Choice

Scenario 20-3
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 20-3. Assuming that utility is directly proportional to the cash value of after-tax income, which government policy would an advocate of libertarianism 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:

Primary And Secondary

Terms used to distinguish between initial (primary) and subsequent (secondary) stages or categories in various contexts, such as production processes, pollutants, or levels of education.

Sewage Treatment

The process of removing contaminants from wastewater, primarily from household sewage, to produce an effluent that is suitable for discharge or reuse.

Suspended Solids

Particles that are not dissolved in liquid, floating or suspended in water or another liquid.

Physical Process

Natural phenomena or mechanisms that involve the physics of matter and can affect the environment and ecosystem.