Posts Tagged ‘Congress’

Real World Graduation, Question 78: Tax Rates

RealWorldGraduation_Question_78_Tax_Rates   <– PDF

The U. S. has a graduated personal income tax system.  This means that income levels are divided into several levels, and those income divisions are taxed at different rates.  The tax rates increase as the amount of income increases.  The tax rate of the lowest division of income is called the “base rate”, and all the other tax rates at the higher income levels are called “marginal rates”.  As a person’s income increases, the marginal rates become higher, hence the name “graduated tax”.  For example, in tax year 2014, the income level divisions and marginal rates for single persons and married couples were:

a) 10% rate for incomes between $0 and $9075 (single person), $0 to $18150 (married)

b) 15% rate for incomes between $9075 and $36900 (single), $18150 to $73800 (married)

c) 25% rate for incomes between $36900 and $89350 (single); $73800 to $148850 (married)

d) 28% rate for incomes between $89350 and 186350 (single); $148850 to $226850 (married)

e) 33% rate for incomes between $186350 and $405100 (single); $226850 to $405100 (married)

f) 35% rate for incomes between $405100 and $406750 (single); $405100 to $457600 (married)

g) 6% rate for incomes above $406750 (single); and above $457600 (married)

There are slightly different marginal rates for “heads of household”, but those are not relevant for this topic.

The overall size of the federal government depends on how much tax revenue it can obtain. It is clear from the tax schedule above that those who earn more must generally pay more in taxes.  Some activists desire to reduce the size of the government by using a tactic they call “starving the beast”.  The idea is that if marginal tax rates are reduced, the government will receive less income tax revenue, and thus will ultimately force the government to reduce its budget targets.  The claim is that in the long run, steadily declining revenue will require the government to reduce its spending and therefore its size.  In other words, nearly all taxpayers would have more money left over from their paycheck.  In what ways could this policy “starve the beast”?

a) Money that would otherwise go to the government can be spent on appliances, cars, etc; the benefit accrues to selfish individuals and deprives the government of some revenue.

b) Money that would otherwise go to the government can be spent on furthering one’s education; the benefit accrues to selfish individuals and deprives the government of some revenue.

c) Money that would otherwise go to the government can be spent on charitable causes. The benefits accrue to the less fortunate, but deprives the government of some revenue.

d) Money that would otherwise go to the government can be spent on vacations or saved for the future; either way, the benefit accrues to selfish individuals and deprives the government of some revenue.

e) All of the above to varying degrees, depending on individual preferences.

(The answer is on p. 2 of the PDF.)

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Posted in Congress, critical thinking, Economics, progressive, Real World Graduation | No Comments »

RealWorldGraduation_Question_72_CongressionalSalaries  <— PDF

Please see the PDF for both the question and answer.

Thanks,

EDD

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Real World Graduation: Question 42: Political Promises

RealWorldGraduation_Question_42_Political_Promises   <– PDF

During the Presidential election campaign of 1988, George H. W. Bush stated, “Read my lips, no new taxes”.   He was subsequently elected as the 41st President of the U. S.  What did this statement mean regarding his intended tax policy as President?

a) He would never raise income taxes if elected President.

b) Since he said “read my lips”, the statement was directed only at deaf people; so he meant that he would not raise income taxes on deaf people.

c) “No new taxes” means he would not create any new category of taxes.

d) Every tax must be paid every year, therefore all taxes are “new”; thus this statement means he was going to eliminate all federal taxes.

e) A combination of a) and c).

(The answer is on p. 2 of the PDF.)

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Posted in critical thinking, elections, government powers, Real World Graduation, U. S. Constitution | No Comments »

Real World Graduation: Question 33

RealWorldGraduation_Question_33   <– PDF

“Lobbying” is the term used when a person or organization spends money and energy to influence legislators, administrations, and courts to adopt policies favorable to the person or organization. It has been estimated that a total of about $3 billion was spent by lobbyists in Washington in 2007, mostly in the course of influencing Congress.  Among the groups that have lobbying activities in Washington are finance, insurance, real estate, medical industry, unions, trade associations (such as construction, firemen, police, miners, plumbers, electricians), industrial associations (such as automotive, tobacco), and the various ethnic, civil rights, and conservation activist groups.  The influence of lobbyists has become so pervasive that often it is lobby groups that actually write the legislation that Congress votes on.  Generally, these legislative initiatives involve a change in tax conditions or status, or changes in the amount and type of regulation.  Congress is supposed to be working in the interests of the people, but most legislation is pushed through due to the activity and influence of lobbyists.   In what ways do lobbyists present a problem for the legislative function?

a) Congress opens itself up for legitimate criticism by accepting money, gifts, favors, and travel from lobbyists.

b) There is considerable risk that corporate interests will gain unfair tax advantages because they wrote the legislation for that purpose

c) There is some risk that insufficient regulations will be enacted due to lobbying influence, because the legislation was written by those who will benefit from the change in regulation.

d) There is some risk that unions will engage in unethical activities because they get favorable treatment under the law, which occurs because they wrote the legislation for that purpose.

e) A combination of a) , b), and c).

(The answer is on p. 2 of the PDF.)

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Posted in Congress, critical thinking, government powers, Real World Graduation | No Comments »