Question

Suppose the government is concerned that research assistants already make too little money and, therefore, wants to minimize the share of the tax paid by employees. Of the three tax proposals, which is best for accomplishing this goal?

a)The proposal in which workers pay the entire tax
b)The proposal in which each side pays half the tax
c)The proposal in which employers pay the entire tax
d)None of the proposals is better than the others

Answer 1

D)None of the proposals is better than the others

Step-by-step explanation:

None of these alternatives is a good method for decreasing the taxes paid by the employees:

Option A) If workers pay the entire tax then there is no change at all.

Option B and C) If the employer has to pay some or all of the employees' taxes, then they will simply lower their wages to compensate for the extra costs.

The only way a tax can help to increase the income for low wage earners is to apply higher tax rates to those who earn more, and lower tax rates to those who earn less (called progressive taxes).