Question

According to the table in Exhibit 1, which of the following statements is correct? (x) A regressive tax is illustrated by Tax Plan A and Tax Plan B Exhibit 1 (y) A proportional tax is illustrated by Tax Plan A and Tax Plan D. Tax Plan Tax Plan Tax Plan Tax Plan (z) A progressive tax is illustrated by Tax Plan C. INCOME Tax amount Tax amount Tax amount Tax amount A. (x). (y) and (2) $20,000 $8,000 $8,000 $2,000 $5,000 B. (x) and (y) only c. (x) and (z) only $40,000 $8,000 $12,000 $8.000 $10,000 D. (y) and (z) only $80,000 $8,000 $20,000 E. $16,000 $20,000 (z) only Suppose a poor family has three children in public school and a rich family has two children in private school. Which of the following statements is (are) correct? (x) The benefits principle suggests the benefits of public school exceed those of private school v The ability-to-pay principle would suggest that the rich family should pay more in taxes to pay for public

Answer 1

Answer:

From the following it is seen that Tax Plans A and B are regressive, Tax Plan D is proportional and Tax Plan C is progressive.

Thus only X and Z statements are true. Hence option C is the correct answer.

40 401 25 Tax Plan A Tax Plan B Tax Plan C Tax Plan D Income Tax Amount Tax Rate(%) Tax Amount Tax Rate(%) Tax Amount Tax Rate(%) Tax Amount Tax Rate(%) 20000 8000 8000 2000 101 5000 40000 8000 201 12000 301 8000 20 10000 80000 8000 10 16000 20000 20000 Regressive Tax Plans Tax Plan A and B Proportional Tax Plans Tax Plan D Progressive Tax Plans Tax Plan C

The second part of the question is not complete. Hence not answered.