Author Question: The payroll tax rate is 12.4 on an amount of income adjusted annually for inflation called the wage ... (Read 106 times)

tichca

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The payroll tax rate is 12.4 on an amount of income adjusted annually for inflation called the wage base (e.g., 97,500 for the year 2007). Half of the tax is withheld from the employee's pay with the other half being paid by the employer.
 
  How might this tax be viewed as regressive?

Question 2

What is a rent ceiling and what are its effects if it is set above the equilibrium rent?
 
  What will be an ideal response?



jaaaaaaa

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Answer to Question 1

The argument is that after the cutoff point the average tax rate will actually become smaller with increases in income.

Answer to Question 2

A rent ceiling is a specific example of a price ceiling. A rent ceiling is a government imposed regulation that makes it illegal to charge a rent higher than a specified level. If a rent ceiling is set above the equilibrium rent, it has no effect because it does not make the equilibrium rent illegal.



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