Assume for the following scenario that there is a 10% sales tax on gasoline. Determine the amount of money each individual in the following table spends on gasoline taxes and their average tax rate. Total Taxable Income Average Tax Rate Gasoline Expenditures Total Tax Due Name (Dollars) Tim 10,000 (Dollars) 10,000 (Dollars) Brian 40,000 32,000 Crystal 55,000 38,500 Hilary 85,000 51,000 (Percent) Given the information in the previous table, sales tax on gasoline is because the average tax rate as income rises.

Assume for the following scenario that there is a 10% sales tax on gasoline. Determine the amount of money each individual in the following table spends on gasoline taxes and their average tax rate. Total Taxable Income Average Tax Rate Gasoline Expenditures Total Tax Due Name (Dollars) Tim 10,000 (Dollars) 10,000 (Dollars) Brian 40,000 32,000 Crystal 55,000 38,500 Hilary 85,000 51,000 (Percent) Given the information in the previous table, sales tax on gasoline is because the average tax rate as income rises.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Design Of The Tax System

Section: Chapter Questions

Problem 2PA

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Federal excise taxes on gasoline vary widely across the developed world. The United States has the lowest taxes at USD $0.40 per gallon (or Â£0.07 per liter), Canada has taxes of $0.60 per gallon, Japan and much of Europe is $2.00 per gallon, while Britain has the highest tax at $2.83 a gallon or Â£0.5 per liter. If gasoline taxes are intended to reduce the time losses from road congestion in urban environments and gasoline pre-tax costs about Â£0.40 per liter, why might the optimal tax in Canada be 50 percent higher than in the United States? What would be an explanation for why adjacent countries would have such different estimates of the price elasticity of demand for auto driving?16
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