A family with an income of $25,000 pays $3,000 in taxes per year, and a family with an income of $50,000 pays $4,000 in taxes per year. The tax plan is:

Question

Quizplus · Accepted Answer

The tax plan is regressive for income levels between $25,000 and $50,000 because the family with the lower income pays a higher percentage of their income in taxes compared to the family with the higher income. As the income level increases, the tax rate remains the same, which means the plan is not proportional for income levels above $50,000. The plan is also not progressive for all income levels below $25,000 because the tax rate is the same for both families, regardless of their income level. The plan is not based on the benefits-received principle, which suggests that individuals or families who benefit more from government programs or services should pay more in taxes. Therefore, the best choice is A.

A Family with an Income of $25,000 Pays $3,000 in Taxes