Suppose that the income tax in a certain nation is computed as a flat rate of 5 percent, but no tax is levied above $50,000 in taxable income. Taxable income, in turn, is computed as the individual's income minus $10,000; that is, everyone gets a $10,000 deduction. What are the marginal and average tax rates for each of the following three workers? (Evaluate the marginal tax rate at each person's current income level.) a. A part-time worker with annual income of $9,000. b. A retail salesperson with annual income of $45,000. c. An advertising executive with annual income of $600,000. Is the tax progressive, proportional, or regressive with respect to income?

Suppose that the income tax in a certain nation is computed as a flat rate of 5 percent, but no tax is levied above $50,000 in taxable income. Taxable income, in turn, is computed as the individual's income minus $10,000; that is, everyone gets a $10,000 deduction. What are the marginal and average tax rates for each of the following three workers? (Evaluate the marginal tax rate at each person's current income level.) a. A part-time worker with annual income of $9,000. b. A retail salesperson with annual income of $45,000. c. An advertising executive with annual income of $600,000. Is the tax progressive, proportional, or regressive with respect to income?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter12: Income Distribution, Poverty, And Discrimination

Section: Chapter Questions

Problem 1SQP

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