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Scenario 20-2 The Government Is Proposing Switching from a Progressive Tax System

Question 216

Multiple Choice

Scenario 20-2
The government is proposing switching from a progressive tax system, in which families pay 15% of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000 to a tax system in which every family pays 1/4 of its income regardless of how much they earn and all income redistribution is eliminated. That is, the tax revenue generated is used only for infrastructure, public administration, and national defense.
-Refer to Scenario 20-2. Which group would be most in favor of the proposed change in tax policy?


A) Liberals, because they believe in the maximin criterion.
B) Libertarians, because they do not believe in redistributing income.
C) Utilitarians, because they believe in diminishing marginal utility.
D) None of the above would be in favor of the proposed change.

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