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QUESTION
Suppose a progressive tax system with two tax brackets are applicable for this individual. Assume the following.
Suppose a progressive tax system with two tax brackets are applicable for this individual. Assume the following.
•Deductibility of interest rates on borrowed money on the lower tax bracket
• Non-deductibility of interest rates on borrowed money for the higher tax bracket.
• Interest earning are taxed according on the top tax bracket only.
How would the inter temporal BC look given there is a progressive tax, are there kinks?
