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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