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Consider an economy with the following tax brackets. 10% income tax rate for the first $20,000 in earnings 20% income tax rate for earnings between

Consider an economy with the following tax brackets.

  • 10% income tax rate for the first $20,000 in earnings
  • 20% income tax rate for earnings between $20,001 and $40,000
  • 30% income tax rate for earnings between $40,001 and $60,000
  • 40% income tax rate for earning of $60,001 or above

In this economy, a worker earning $60,000 would pay 10% on the first $20,000 earned, 20% on the second $20,000 earned, and 30% on the last $20,000 earned, for a total of $12,000 in incometax.

An advocate of supplyside economics would favor

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An increase of the 40% tax rate in the $60,000 and above tax bracket.

An increase of the tax rate for all tax brackets.

A reduction of the 40% tax rate in the $60,000 and above tax bracket.

issuing a tax rebate check of $500 to all workers in the economy.

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