Question

Brian and Luisa must pay an income tax. Both Brian and Luisa pay $10,000 in taxes each year, but Brian earns $200,000, and Luisa earns $100,000. From this information, you can infer that this tax is:

a.progressive.
b.equitable.
c.regressive.
d.proportional

Answer 1

Brian and Luisa are paying a fixed amount of tax, which suggests a proportional tax; however, since the tax does not take a consistent percentage of their respective incomes, it's actually not proportional according to the typical definition of proportional taxes.

Step-by-step explanation:

Based on the information provided about Brian and Luisa's income and tax payments, we can infer that the tax they are paying is a proportional tax. In a proportional tax system, all taxpayers pay the same percentage of their income, regardless of the amount earned.

Here, both individuals are paying $10,000 each year, but Brian earns twice as much as Luisa. That being said, the flat $10,000 tax represents 5% of Brian's income and 10% of Luisa's income - so it's not proportional according to the typical definition.

In a progressive tax system, like that explained in the example with the marginal rate of 15% for someone earning $35,000 per year, taxpayers pay an increasing rate as income rises. This is typical for the United States federal income tax system. On the other hand, in regressive tax systems, lower-income individuals pay a higher portion of their earnings compared to higher-income individuals.