Assume a family that earns $20,000 pays $1,500 in income taxes, while a family that earns $40,000 pays $3,500 in income taxes. In this situation, the income tax system is

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The tax system in this scenario is considered progressive because the percentage of income paid in taxes increases as the income of the family increases. The family earning $20,000 pays 7.5% of their income in taxes, while the family earning $40,000 pays 8.75% of their income in taxes. This means that the tax burden falls more heavily on those who earn more, which is a characteristic of a progressive tax system.

Assume a Family That Earns $20,000 Pays $1,500 in Income