The figure given below shows the Lorenz curves of two countries (Country A and Country B).Figure 19.2
Total income (cumulative percentage)
Total population (cumuative percentage)

-If an individual who earns $20,000 pays $2,000 in taxes and another individual who earns $100,000 pays $10,000 in taxes, then these individuals are being taxed under a _______ tax system.

Question

The figure given below shows the Lorenz curves of two countries (Country A and Country B).Figure 19.2
Total income (cumulative percentage)
Total population (cumuative percentage)
 
-If an individual who earns $20,000 pays $2,000 in taxes and another individual who earns $100,000 pays $10,000 in taxes, then these individuals are being taxed under a _______ tax system.

Quizplus · Accepted Answer

In a proportional tax system, the tax rate remains constant regardless of income level. Both individuals are paying 10% of their income in taxes, which is characteristic of a proportional tax system.

The Figure Given Below Shows the Lorenz Curves of Two