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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Is it true that, under a proportional income tax structure, a person who earns a high income will pay more in taxes than a person who earns a low income? Explain your answer.

To determine

Identify the differences in tax payment under the proportional income tax structure.

Explanation

The proportional income tax structure is one of the methods of collecting income tax. In which, the percentage of income paid in taxes remains the same at any income level. Therefore, under this tax structure method, the high income group has to pay more than the lower-income groups. For example, suppose the tax rate is 20%. Thus, a person who earns $20,000 has to pay $4,000 (20,000×20/100) in taxes

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