### Tax Structure ExampleThe table below demonstrates how a $2,000 school tax affects families with different incomes:| Income | Percent of Income Paid in Tax | Total amount of Tax Paid ||-----------|-------------------------------|--------------------------|| Family A | $10,000 | 20% | $2,000 || Family B | $50,000 | 4% | $2,000 || Family C | $100,000 | 2% | $2,000 |All families are required to pay a flat $2,000 tax.#### Tax Structure AnalysisGiven that all families pay the same fixed amount of $2,000, the percentage of income paid varies inversely with the income level, which suggests:- **Regressive Tax:** This tax structure takes a larger percentage of income from lower-income families than from higher-income families.#### Question:Which type of tax structure does this school tax resemble?- ○ Regressive Tax- ○ Proportional Tax- ○ Progressive TaxThe correct answer is: **Regressive Tax.**

Tax rate is the percentage of income that is deducted to pay to government as taxes

Income Percent of Income Paid in Tax Total amount of Tax Paid Family A $10,000 20% $2,000 Family B $50,000 4% $2,000 Family C $100,000 2% $2,000 If all families had to pay a $2,000 tax to fund schools, which type of tax structure is this school tax? O Regressive Tax O Proportional Tax O Progressive Tax

Income Percent of Income Paid in Tax Total amount of Tax Paid Family A $10,000 20% $2,000 Family B $50,000 4% $2,000 Family C $100,000 2% $2,000 If all families had to pay a $2,000 tax to fund schools, which type of tax structure is this school tax? O Regressive Tax O Proportional Tax O Progressive Tax

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Percent of Income Paid in Total amount Income Tax of Tax Paid Family $10,000 20% $2,000 A Family $50,000 4% $2,000 В Family $100,000 2% $2,000 C If all families had to pay a $2,000 tax to fund schools, which type of tax structure is this school tax? Regressive Tax Proportional Tax Progressive Tax