Play the Tax Game available online at
http://econ.glendale.edu/index.php

It is a simulation in which you are the tax dictator for a mythical country. You must collect enough revenue-but not too much-for your government by adjusting a number of different tax rates, caps and deductions. When you collected sufficient revenue, the game will tell you the tax incidence.

That is the impact of your tax choices on different income groups ranging from the bottom 20% to the top 1%. And, the program will estimate your Gini coefficient.

You will be asked to readjust you tax choices so that you are satisfied with your tax incidence. There is no correct answer to the game; each of you will differ in your political perspective and how you choose your tax rates. However, I will ask you to justify each of your tax choices as well as the overall tax incidence.

Along with a print out of your final outcome and choices, answer the following.

a. For each of the taxes, explain the choice you made for the tax rates. If relevant, also explain any choices you made for deductions or caps. In other words, why did you choose each number you entered in the simulation. In justifying your choices, please refer to the progressive or regressive impact of each of these taxes.

b. Identify the tax choice that had the most progressive effect on your overall outcome. Why did it have such a progressive effect?

c. Identify the tax choice that had the most regressive effect on your overall outcome. Why did it have such a regressive effect?

d. Explain carefully why you are pleased with the Gini coefficient for your country. How does it differ from the Gini coefficient for the US?