There are ten states in the democratic nation of Fatlandia, and each state has ten thousand residents. Although incomes vary, each Fatlandian pays a tax equal to the total cost of all government projects divided by the number of residents in the country. Currently, two states each have one army base. An army base adds $2 million to a state's local economy each year. In addition, in terms of increased security, the annual marginal benefit to Fatlandia of having an additional army base is shown below. The total cost of an army base is $8 million per year.
Taxes in Fatlandia are:
A) regressive.
B) based on each resident's willingness to pay.
C) proportional.
D) progressive.
Correct Answer:
Verified
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