There are two individuals in a society. The federal income tax in this society is such that that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. James earns a gross income of $40,000, and Jane earns a gross income of $65,000. Out of his income, James pays $1,000 in local taxes; out of her income, Jane pays $20,000 in local taxes. Which of the following statements is true? a. The federal tax system is proportional. b. James’ total (local + federal) tax bill is greater than Jane’s total tax bill. c. The federal tax system is regressive d. The federal tax system is progressive.
There are two individuals in a society. The federal income tax in this society is such that that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. James earns a gross income of $40,000, and Jane earns a gross income of $65,000. Out of his income, James pays $1,000 in local taxes; out of her income, Jane pays $20,000 in local taxes. Which of the following statements is true? a. The federal tax system is proportional. b. James’ total (local + federal) tax bill is greater than Jane’s total tax bill. c. The federal tax system is regressive d. The federal tax system is progressive.
Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter16: Government Spends, Collects, And Owes
Section: Chapter Questions
Problem 22AA
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There are two individuals in a society. The federal income tax in this society is such that that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. James earns a gross income of $40,000, and Jane earns a gross income of $65,000. Out of his income, James pays $1,000 in local taxes; out of her income, Jane pays $20,000 in local taxes. Which of the following statements is true?
a. The federal tax system is proportional.
b. James’ total (local + federal) tax bill is greater than Jane’s total tax bill.
c. The federal tax system is regressive
d. The federal tax system is progressive.
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