Homework Answers
6)
A) B)
|
Martin's Total Tax = Flat Tax + Deduction = $50,000 * 25% + $19,000 = $31,500 Average Tax rate = |
Diego's Total Tax = Flat Tax + Deduction = $100,000 * 25% + $19,000 = $44,000 Average Tax rate = |
%
%C) Current Tax Revenue of Government = A+B = $75,500
Previous Tax Revenue of Government = $19,500 + $44,500 = $64,000
The total tax revenue raises by $11,500.
D) The new system is regressive compared to the one in the previous question because it has a flat tax rate whereas in the progressive tax, tax rate increases as taxable income increases. In the previous question, the person with income below $20,000 has to pay 10% tax and the person earning above $50,000 has to pay 25% tax but her everyone has to pay the same tax.
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Question 6. Question 5 for reference
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