If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

Question

Jacquelyn Morton

Business

3 January, 17:31

If government tax policy requires Jane to pay $25,000 in taxes on annual income of $200,000 and Mary to pay $10,000 in tax on annual income of $100,000, then the tax policy is:

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Answers (1)

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Maleah · Answer 1

The tax policy in the given scenario is Progressive.

Explanation:

A progressive tax is based on low-income payers due to their ability to pay which places a lower corporate tax rate on lower-income payers relative to those with greater income. It implies that higher-income earners take a bigger share than low-income individuals.

A progressive tax is one for people who have received higher income and demand a higher tax. There is a reason for usually spending more of your income on keeping your standard of living by people with a lower income. Individuals who are wealthier will normally (and then some) provide the basic necessities of life.

The degree to which a tax system is progressive relies on how fast tax rates rise relative to income increases.

For example, if the tax code has a low 10% and a high 30% rate, and the income tax rate is between 10 and 80%, the latter is progressionary.