Given the Following Tax Structure, What Is the Minimum Tax

question 20

Essay

Given the following tax structure, what is the minimum tax that would need to be assessed on Dora to make the tax progressive with respect to average tax rates? What is the minimum tax that would need to be assessed on Dora to make the tax progressive with respect to effective tax rates? $\begin{array} { l c r c } \underline{\text { Taxpayer }} & \underline{\text { Salary }} & \underline{\text { Muni-Bond Interest }} & \underline{\text { Total Tax} } \\\text { Diego } & 30,000 & 10,000 & 1,500 \\\text { Dora } & 50,000 & 5,000 & ? ? ?\end{array}$

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Definitions:

Null Hypothesis

In statistical hypothesis testing, it is the hypothesis that there is no effect or no difference, and it serves as the default or starting assumption.

Slope

In the context of linear regression, it's the amount by which the dependent variable is expected to change for a one-unit change in the independent variable.

Alternative Hypothesis

The hypothesis that proposes there is a statistically significant difference between two or more groups or variables.

Prediction Intervals

These are estimates that predict the range within which a future observation will fall, with a certain probability.