It is a simulation in which you are the tax dictator for a mythical country. You must collect enough revenuebut not too muchfor your government by adjusting a number of different tax rates, caps and deductions. When you collected sufficient revenue, the game will tell you the tax incidence. That is the impact of your tax choices on different income groups ranging from the bottom 20% to the top 1%. And, the program will estimate your Gini coefficient.

You will be asked to readjust you tax choices so that you are satisfied with your tax incidence. There is no correct answer to the game; each of you will differ in your political perspective and how you choose your tax rates.,

After you complete the Tax Game answer the following:

A.. What were your choices for the personal income marginal tax rates? How do your rates compare with current US rates (see them at the end of the tan book)? Why did you raise or lower the rates compared to the US?

B. What was your choice for the payroll tax (the rate and the threshold)? Why did you make this decision? Will it make the tax more progressive, less progressive, more regressive or less regressive? Why?

C. For the remaining taxes, which choice made the system more progressive? Why?

D. For the remaining taxes, which choice made the system more regressive? Why?

E. What was your final Gini coefficient? Is it higher or lower than the current US 0.4? What does this tell you about your tax choices?

Tax Game Summary If you are dissatisi - ... Ully way with your tax rates or their impact on different income groups, click on a tax to change its rate. See how this change affects different income groups. If you are completely satisfied with your tax rates, Click Here For A Printer Friendly Page Your Marginal Income Tax Your Average Income Tax Your Total Tax Incidence 40.0% 31.6% 39.3% 33.0% 25.0% 23.1% 14.2% Top 1% Top 20% Upper Middle 20% Middle 20% Lower Middle 20% Bottom 20% 31.6% 16.0% 8.0% 11.0% 25.4% 5.2% 2.5% 5.0% Top 1% Over $400,000 Top 20% $125,000 - $399,999 Upper Middle 20% $75,000 - $124,999 Middle 20% $45,000 - $74,999 Lower Middle 20% $25,000 - $44,999 Bottom 20% Under $24,999 18.8% Dependent Deduction Home Deduction $1,000 1 House 15.9% 13.2% 8.0% Payroll Tax Threshold Level $500,000 Revenue Gini Coefficient $4,798 Billion 0.34 Sales Tax 6.0% You have a "Progressive" tax. Property Tax 1.0% Corporation Tax 10.0% Tobacco Alcohol Gasoline $6.00 $2.00 $0.20 Wealth Tax 0.20% Tax Game Summary If you are dissatisi - ... Ully way with your tax rates or their impact on different income groups, click on a tax to change its rate. See how this change affects different income groups. If you are completely satisfied with your tax rates, Click Here For A Printer Friendly Page Your Marginal Income Tax Your Average Income Tax Your Total Tax Incidence 40.0% 31.6% 39.3% 33.0% 25.0% 23.1% 14.2% Top 1% Top 20% Upper Middle 20% Middle 20% Lower Middle 20% Bottom 20% 31.6% 16.0% 8.0% 11.0% 25.4% 5.2% 2.5% 5.0% Top 1% Over $400,000 Top 20% $125,000 - $399,999 Upper Middle 20% $75,000 - $124,999 Middle 20% $45,000 - $74,999 Lower Middle 20% $25,000 - $44,999 Bottom 20% Under $24,999 18.8% Dependent Deduction Home Deduction $1,000 1 House 15.9% 13.2% 8.0% Payroll Tax Threshold Level $500,000 Revenue Gini Coefficient $4,798 Billion 0.34 Sales Tax 6.0% You have a "Progressive" tax. Property Tax 1.0% Corporation Tax 10.0% Tobacco Alcohol Gasoline $6.00 $2.00 $0.20 Wealth Tax 0.20%