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Question: What must the common federal flat tax rate be, so that it will raise the same tax revenue(I.e, federal plus provincial revenue) as was
Question: What must the common federal flat tax rate be, so that it will raise the same tax revenue(I.e, federal plus provincial revenue) as was the case before the federal flat tax was introduced?
In class, we discussed the distributional implications of a move from progressive taxation to a flat tax. According to Revenue Canada, the Federal Income tax rates for 20181 are as follows: 15% on the first $46,605 of taxable income, 20.5% on the next $46,603 of taxable income (on the portion of taxable income over 46,605 up to $93,208), 26% on the next $51,281 of taxable income (on the portion of taxable income over $93,208 up to $144,489), 29% on the next $61,353 of taxable income (on the portion of taxable income over 144,489 up to $205,842), 33% of taxable income over $205,842. Ontario's provincial income tax rates for 2018 are as follows: 5.05% on the first $42,960 of taxable income, 9.15% on the next S42.963, 11.16% on the next $64,077, 12.16% on the next $70,000. 13.16 % on the amount over $220,000 Irie Nayabinghi., Tokyo Sexwale and Jane Wainwright live in Ontario. Irie's gross income is $50,000, Tokyo's gross income is $70,000 and Jane's gross income is S180,000. They deductions. Suppose these are the only three tax payers. Based on the above tax schedules and assuming that gross income is equal to taxable income, answer the following questions: (i) Someone recommends that the progressive FEDERAL tax schedule above should be replaced by a flat tax where everyone pays the same federal tax rate regardless of income. Assume that Ontario's progressive (provincial) tax schedule remains unchangedStep by Step Solution
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