Assignment Samples

Economics

QUESTION : – The questions asked for the following solution set are regarding taxes and tax policies in the US. 

SOLUTION : –

Q1)

Sin tax– Though mainly used to control harmful products such as tobacco; it’s a method which can be used to control people’s behavior. The biggest benefit would be to reinstate morals in the driving sector which will definitely curb traffic offenses. Also, it will be a big boost to the Government revenue.

Q2)

The reason why no strict enforcement of Speed Limits laws

  1. Strict limits affect drivers psychologically i.e. drivers will focus their attention on monitoring their speed versus what is on the sign, this means they drive at a lower speed. Allowing for deviation of some limits relaxes this
  2. Speed Enforcement is expensive both in the equipment’s investment and in slowing the growth of the economy.

Q3)

Flat tax rates are normally referred to as regressive by the fact that they oppress the poor. At a flat rate, the poor person spends most of his income paying taxes compared to a richer person, which in return leaves him or her struggling to survive. Let’s say A earns $1000 and B earns $400 and both buy Sugar at $120 assuming tax rate is 20%.

A tax income proportion=20/1000=0.02=2%

B tax income proportion=20/400=0.05=5%