Joe earns $10,000 in income and pays $1,000 in taxes while Jack earns $30,000 and pays $4,000 in taxes. The structure of this tax is:

Question

Quizplus · Accepted Answer

The tax takes 10 percent of Joe's income ($1,000/$10,000 = 0.10), and it takes slightly more than 13 percent of Jack's income ($4,000/$30,000 = 0.133). Since the tax takes a greater share of Jack's income than of Joe's income, the tax is progressive.

Joe Earns $10,000 in Income and Pays $1,000 in Taxes