This table shows data on taxes paid by three individuals living in each of three countries: A, B, and C. The tax paid in dollars is based on the marginal tax rates assessed in each of the three countries. Assume that each individual earns an income of exactly $37,000, and there are no deductions or exemptions that need to be applied. Reference: Ref 17-2 (Table: A Cross-Country Comparison) According to the data in the table, which country has a flat tax rate system?
A) A and B only
B) A and C only
C) C only
D) None of the countries has it.

Question

This table shows data on taxes paid by three individuals living in each of three countries: A, B, and C. The tax paid in dollars is based on the marginal tax rates assessed in each of the three countries. Assume that each individual earns an income of exactly $37,000, and there are no deductions or exemptions that need to be applied.  Reference: Ref 17-2 (Table: A Cross-Country Comparison) According to the data in the table, which country has a flat tax rate system?
A) A and B only 
B) A and C only 
C) C only 
D) None of the countries has it.

Quizplus · Accepted Answer

In country C, all three individuals pay the same flat tax rate regardless of their income. In countries A and B, the tax rate increases as income increases, which is indicative of a progressive tax system rather than a flat tax system. Therefore, the correct answer is C only.

This Table Shows Data on Taxes Paid by Three Individuals