Final answer:
A tax is considered progressive if the rate of taxation increases along with the income. In the presented example, the tax rate goes from 20% to 25% as income increases from $10,000 to $16,000, proving the tax system to be progressive.
Step-by-step explanation:
The question asks whether, if you pay a $2,000 tax on $10,000 of taxable income and a $4,000 tax on a taxable income of $16,000, the tax is progressive. To answer this question, we need to understand the concept of progressive taxation. This is a system where the rate of taxation increases for individuals who earn more money. From the example provided, the tax rate for $10,000 income is 20% ($2000 is 20% of $10,000), and for $16,000 income, it's 25% ($4000 is 25% of $16,000). Because the tax rate increases as the income increases, it aligns with the definition of a progressive tax.
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