Author Question: If a dollar today will likely have more purchasing power because of inflation, then a dollar a year ... (Read 127 times)

cool · **on:** Jun 29, 2018

If a dollar today will likely have more purchasing power because of inflation, then a dollar a year from now ________ a dollar today.

A) will be more valuable than B) will have the same value as
C) will be less valuable than D) may be more valuable or less valuable than

Question 2

Social Security benefits are determined by a complex formula that is rarely discussed publicly but the information is available on the Social Security Administration's website.

A recipient's lifetime earnings is indexed and averaged over the highest 35 years of earnings to obtain an Average Monthly Indexed Earnings amount (AIME). If Social Security benefits begin at age 65 to 67, the monthly benefit in 2007 is 90 of the first 680 of AIME, 32 of AIME above 680 and less than 4100, and only 15 of AIME in excess of 4100 . For example, an individual whose indexed earnings were at the poverty level of 10,200/year would receive 78.4 of that in benefits, while an average earner of 37,000/year would receive only 44.8 of that in benefits, and individual's with above average earnings receive an even lower proportion in benefits. Using this information how could one argue that the payroll tax is not regressive?

scrocafella · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

The fact that much of this tax comes back to the lower wage earner in the form of income tends to reduce the regressivity of the tax. Also, much smaller benefits are returned to those who earn higher incomes.