Suppose that the government collected taxes in the following fashion: people who earn less than $50,000 pay 25 percent in taxes,people who earn between $50,000 and $100,000 pay 35 percent in taxes,people who earn between $100,000 and $200,000 pay 30 percent in taxes,and people who earn more than $200,000 pay 28 percent in taxes.Which of the following statements is not correct?
A)The tax system is proportional for income levels less than $50,000 and regressive for income levels above $50,000.
B)The tax system is regressive for income levels less than $100,000 and progressive for income levels above $100,000.
C)The tax system is progressive for income levels less than $100,000 and regressive for income levels above $100,000.
D)The tax system is progressive for income levels less than $50,000 and proportional for income levels above $100,000.

Question

Quizplus · Accepted Answer

The tax system is not progressive for income levels less than $100,000 because the tax rate increases from 25% to 35% as income increases from below $50,000 to between $50,000 and $100,000. However, it becomes regressive above $100,000 as the tax rate decreases from 35% to 30% and then to 28%.

Suppose That the Government Collected Taxes in the Following Fashion