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 percent of all their earned income in taxes. This income- tax system is

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A regressive tax system means that the lower income earners pay a higher percentage of their income in taxes compared to higher income earners. In this system, everyone pays a fixed amount of $2000, which is a higher burden on lower income earners compared to higher income earners, making it regressive.

Suppose Taxes Are Levied in the Following Way