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

question 436

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 utilitarianism 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

---

Definitions:

Start-Up Businesses

New businesses that are in the initial stages of operation, often characterized by innovation, scalability, and seeking investment.

Office Space

Physical locations or areas designated for business operations and work of employees in an organization.

Cloud-Based Solutions

Services, storage, and computing resources accessed and managed over the internet, enabling flexibility and scalability for businesses and users.

Electronic Content

Digital material that can be transmitted over the internet or computer networks, like text, images, audio, and video.