Question

5. a hypothetical society has three income earners, and all three must pay income taxes. the taxable income of ciara is $40,000, the taxable income of isabella is $100,000, and the taxable income of justin is $200,000. a. how much tax revenue is raised under a proportional income tax when the tax rate is 10 percent? how much is raised if the tax rate is 15 percent?

Answer 1

Under a proportional income tax, the tax revenue is calculated by multiplying the taxable income by the tax rate. The tax revenue raised when the tax rate is 10 percent is $4,000 for Ciara, $10,000 for Isabella, and $20,000 for Justin. When the tax rate is 15 percent, the tax revenue increases to $6,000 for Ciara, $15,000 for Isabella, and $30,000 for Justin.

Step-by-step explanation:

Under a proportional income tax, the tax revenue is calculated by multiplying the taxable income of an individual by the tax rate. In this case, if the tax rate is 10 percent, the tax revenue would be:

Tax revenue for Ciara = $40,000 x 0.10 = $4,000

Tax revenue for Isabella = $100,000 x 0.10 = $10,000

Tax revenue for Justin = $200,000 x 0.10 = $20,000

If the tax rate is increased to 15 percent, the tax revenue would be:

Tax revenue for Ciara = $40,000 x 0.15 = $6,000

Tax revenue for Isabella = $100,000 x 0.15 = $15,000

Tax revenue for Justin = $200,000 x 0.15 = $30,000