Public Finance (The McGraw-Hill Series in Economics)
Public Finance (The McGraw-Hill Series in Economics)
10th Edition
ISBN: 9780078021688
Author: Harvey S Rosen, Ted Gayer
Publisher: McGraw-Hill Education
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Chapter 14, Problem 2DQ
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To determine: Whether there is a tax progressiveness for the two people in a society.

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According to Person X the taxes will not be progressive, if the rich as well as the poor has lost the similar amount of utility, then the payment made by the rich person will be higher because of the marginal utility of income that is diminishing. On the other hand, the progressive taxes need a huge part of the income that has to be taken from people who are rich (this mainly refers to the average rate of tax). This kind of tax plan only needs the absolute amount to be more and not the amount that is proportional. For example, if there is a decline in the marginal utility, however very nearest to the constant then the poor and rich might make a payment closest to the similar amount in the taxes and this payment would be a large part of money in the income of a poor person.

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Public Finance (The McGraw-Hill Series in Economics)

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