Authors libby rittenberg 812
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$8,025–$32,550 for individuals. That person thus faced a marginal tax rate
of 15%.
Economists argue that choices are made at the margin; it is thus the
marginal tax rate that is most likely to affect decisions. Say that the
individual in our example is considering taking on additional work that
would increase his or her income to $15,025 per year. With a marginal tax
rate of 15%, the individual would keep $5,950 of the additional $7,000
earned. It is that $5,950 that the individual will weigh against the
opportunity cost in forgone leisure in deciding whether to do the extra
work.
Property Taxes
Property taxes are taxes imposed on assets. Local governments, for
example, generally impose a property tax on business and personal
property. A government official (typically a local assessor) determines the
property’s value, and a proportional tax rate is then applied to that value.
Property ownership tends to be concentrated among higher income
groups; economists generally view property taxes as progressive. That
conclusion, however, rests on assumptions about who actually pays the
tax, an issue examined later in this chapter.
Sales Taxes
Sales taxes are taxes imposed as a percentage of firms’ sales and are
generally imposed on retail sales. Some items, such as food and medicine,
are often exempted from sales taxation.
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
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