Suppose taxes are levied in the following way.All individuals pay a tax equal to $2000 no matter what income they earn.In addition,all individuals pay 20% of all their earned income in taxes.This income-tax system is
A)regressive.
B)progressive.
C)indexed.
D)proportional.
E)an accurate description of the Canadian system.

Question

Quizplus · Accepted Answer

The tax system described is regressive because it takes a larger proportion of income from those who earn less. The $2000 flat tax represents a larger percentage of the income of lower earners than higher earners, and the 20% tax on earnings means that as income increases, the proportion of income paid in taxes decreases.

Suppose Taxes Are Levied in the Following Way