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Chapter 22: Problem 13

Margaret pays a local income tax of 2 percent, regardless of the size of her income. This tax is a. proportional. b. regressive. c. progressive. d. a mix of (a) and (b).

Short Answer

Expert verified
The local income tax paid by Margaret is proportional.

Step by step solution

01

Determine if the tax is proportional

Since Margaret is paying the same percentage (2%) of her income regardless of the size of her income, this tax can be considered proportional.
02

Determine if the tax is regressive

As per the definition, a regressive tax rate would decrease as income increases. However, Margaret's tax rate remains constant at 2%, so it is not regressive.
03

Determine if the tax is progressive

A progressive tax rate would increase as income increases. Since Margaret is paying the same tax rate, regardless of her income, the tax is not progressive. Based on the comparison against the tax type definitions, the local income tax paid by Margaret is: a. proportional.

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Most popular questions from this chapter

Which of the following statements is true? a. \(A\) sales tax on food is a regressive tax. b. The largest source of federal government tax revenue is individual income taxes. c. The largest source of state and local government tax revenue is sales taxes. d. All of the above are true.

According to the shortsightedness effect, politicians tend to favor projects with a. short-run benefits and short-run costs. b. short-run benefits and long-run costs. c. long-run benefits and short-run costs. d. Iong-run benefits and long-run costs.

Which of the following statements is true? a. The most important source of tax revenue for the federal government is individual income taxes. b. The most important source of tax revenue for state and local governments is sales taxes. c. The second most important source of revenue for state and local governments is local property taxes. d. The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. e. All of the above are true.

Which of the following accounted for the second largest percentage of total federal government expenditures in 2007 ? a. Income security b. National defense c. Interest on the national debt d. Education and health

A 5 percent sales tax on food is an example of a a. flat tax. b. progressive tax. c. proportional tax. d. regressive tax.
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