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

---

Definitions:

Deoxyribonucleic Acid

A molecule that contains the genetic instructions for the development, functioning, growth, and reproduction of all known living organisms and many viruses.

Triplicate

A term or condition involving three copies or instances of something.

Dopamine

A neurotransmitter involved in many functions, including motivation, reward, motor control, and the regulation of mood.

Sexual Drive

The basic biological and psychological urge or desire for sexual activity or expression.