Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We showed in class that if there is a person with the highest ability (and, hence, earnings), then the marginal tax rate for that person

We showed in class that if there is a person with the highest ability (and, hence, earnings), then the marginal tax rate for that person should be set to zero because of the incentive effect. What other consideration do we need to take into account if ability can be arbitrarily high or we are not going to adjust the tax rate just for the highest ability person?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Business

Authors: John Daniels, Lee Radebaugh, Daniel Sullivan

16th edition

134200055, 978-0134201542, 013420154X, 978-0134200057

More Books

Students also viewed these Economics questions

Question

6. How can a message directly influence the interpreter?

Answered: 1 week ago