Consider the following consumer problem's facing a proportional income tax. Utility function over consumption (C) and leisure (L) U(C,L)= 3 ln(C)+ 2 ln(L) Total hours : H=40 Labor hours :NS =H-L Proportional income tax rate = 0.2 Production function: Y =zND Total factor productivity : z =4 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget . What is the tax revenue at equilibrium.?
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Consider the following consumer problem's facing a proportional income tax.
Utility function over consumption (C) and leisure (L)
U(C,L)= 3 ln(C)+ 2 ln(L)
Total hours : H=40
Labor hours :NS =H-L
Proportional income tax rate = 0.2
Production function: Y =zND
Total factor productivity : z =4
The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget .
What is the tax revenue at equilibrium.?
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