Assume a family that earns $20,000 pays $1,500 in income taxes, while a family that earns $40,000 pays $3,200 in income taxes. In this situation, the income tax system is:

Question

Benjamin Melendez

Business

5 June, 08:23

Assume a family that earns $20,000 pays $1,500 in income taxes, while a family that earns $40,000 pays $3,200 in income taxes. In this situation, the income tax system is:

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Answers (1)

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Ximena · Answer 1

progressive.

Explanation:

Data provided in the question

Family earns = $20,000

Income tax paid = $1,500

In the other case,

Family earns = $40,000

Income tax paid = $3,200

The tax rate in the first case is

= Income tax paid : family earning

= $1,500 : $20,000

= 7.5%

The tax rate in the second case is

= Income tax paid : family earning

= $3,200 : $40,000

= 8%

As we can see that with the increase in income the income tax rate is also increases that reflect the progressive taxation