Because of tax competition,state and local taxes tend to be _____;however,federal taxes tend to be _____.

Question

Quizplus · Accepted Answer

Tax competition encourages states and localities to keep their taxes low, which tends to lead to regressive taxation (where low-income households pay a higher percentage of their income in taxes than high-income households). On the other hand, federal taxes tend to be more progressive (where high-income households pay a higher percentage of their income in taxes than low-income households) in order to fund a more redistributive welfare state.

Because of Tax Competition,state and Local Taxes Tend to Be