If you pay an average tax rate of 25 percent on your salary of $20,000 and your neighbor pays an average tax rate of 10 percent on his salary of $300,000, the tax system is
A) flat.
B) progressive.
C) regressive.
D) proportional.

Question

Quizplus · Accepted Answer

A regressive tax system is one where the average tax rate decreases as the income increases, which is the case here as your neighbor pays a lower average tax rate on a higher income.

If You Pay an Average Tax Rate of 25 Percent