Question
15. Suppose two people live in a society that has a 25% income tax. Both people have pre-tax income of $40,000. In period 1,
15. Suppose two people live in a society that has a 25% income tax. Both people have pre-tax income of $40,000. In period 1, there was no tax deduction, Lillian gave $6,000 to charity, and Susie gave $4,000 to charity. In period 2, the government makes charitable donations tax deductible, and Lillian gives $8,000. What amount must Susie give in period 2 so that the marginal impact of the tax break is equal to the inframarginal impact of the tax break?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
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