Consider an individual whose earnings are taxed at a rate of 25 percent under the personal income

Question:

Consider an individual whose earnings are taxed at a rate of 25 percent under the personal income tax and at a combined rate of 10 percent under the Canada Pension Plan and Employment Insurance payroll taxes. Suppose that if the individual becomes unemployed, EI replaces 50 percent of his or her before-tax earnings. (Note that EI benefits are subject to income tax, but not payroll taxes.) What percentage of the individual’s after-tax income is replaced by EI? What are the implications for the effects of EI on unemployment?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Public Finance In Canada

ISBN: 9781259030772

5th Canadian Edition

Authors: Harvey S. Rosen, Ted Gayer, Jean-Francois Wen, Tracy Snoddon

Question Posted: