explain why some people argue that diminishing marginal utility implies that progressive taxes are efficient; explain the two logical errors with this argument
people argue that dmu implies progressive taxes are efficient because the utils (x-axis) become equal farther in the curve when the income (y-axis) increases and the tax increases. two errors: you can't measure happiness on a common scale, low income taxpayers may be affected a lot more just because 50% of a dollar is a lot less satisfying than 50% of $100
explain how a 10% tax rate on income can be made progressive, proportional or regressive just by changing deductions or caps
progressive--as it goes up, taxes go up || proportional-- || regressive--
give examples of federal and state taxes that are progressive, proportional or regressive
progressive-- income tax, luxury tax || proportional-- retail tax, medicaid || regressive-- FICA social security loans, payroll tax
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