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. Peter earns a gross income of $53,000, and Sandy earns a gross income of $65,000. Out of his income, Peter pays $3,000 in local taxes; out of her income, Sandy pays $5,000 in local taxes. Which of the following statements is true? a. Peter’s total (local + federal) tax bill is greater than Sandy’s total tax bill. b. The federal tax system is progressive. c. The federal tax system is proportional. d. The federal tax system is regressive
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. Peter earns a gross income of $53,000, and Sandy earns a gross income of $65,000. Out of his income, Peter pays $3,000 in local taxes; out of her income, Sandy pays $5,000 in local taxes. Which of the following statements is true? a. Peter’s total (local + federal) tax bill is greater than Sandy’s total tax bill. b. The federal tax system is progressive. c. The federal tax system is proportional. d. The federal tax system is regressive
Chapter16: The Public Sector
Section: Chapter Questions
Problem 4SQ
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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. Peter earns a gross income of $53,000, and Sandy earns a gross income of $65,000. Out of his income, Peter pays $3,000 in local taxes; out of her income, Sandy pays $5,000 in local taxes. Which of the following statements is true?
a. Peter’s total (local + federal) tax bill is greater than Sandy’s total tax bill.
b. The federal tax system is progressive.
c. The federal tax system is proportional.
d. The federal tax system is regressive
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