Author Question: When the current U.S. income tax system was instituted in 1913, the rate on the highest tax bracket ... (Read 39 times)

schs14 · **on:** Jul 1, 2018

When the current U.S. income tax system was instituted in 1913, the rate on the highest tax bracket was _____.

a. 28 percent
b. 1 percent
c. 15 percent
d. 7 percent

Question 2

Define rent seeking. Is rent-seeking activity likely to be highly profitable in the long run? Why or why not?

What will be an ideal response?

frejo · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

d

Answer to Question 2

Rent seeking is using potentially productive resources to try and obtain transfers from the government. Rent seeking is not likely to be highly profitable in the long run because profits from rent seeking will encourage new rent seekers to enter the market. Increased competition for rents will reduce benefits from rent-seeking activity until they approximate a normal rate of return.