Question

Your friend says that regardless of whether you make $40,000 or $40 million, all income should be taxed at a rate of 15%. Do you agree or disagree? Explain why.

Answer 1

Disagree. Taxation systems generally employ progressive tax rates where higher incomes are taxed at higher rates compared to lower incomes. The idea behind a progressive tax system is to distribute the tax burden more equitably based on one’s ability to pay.