Final answer:
The best example of a progressive tax from the options provided is B: I earn $600 and pay $60 in taxes; you earn $1,200 and pay $200 in taxes, because as the income doubles, the tax paid triples, which fits the progressive tax system where higher earners pay a higher percentage of their income in taxes.
Step-by-step explanation:
The progressive taxation system is one in which the tax rate increases as the taxable amount increases. This means that higher earners pay a larger percentage of their income in taxes compared to lower earners. To determine which scenario best illustrates a progressive tax, we must calculate the average tax rate, which is the total taxes paid divided by total income.
- For option A, the average tax rate for someone earning $600 is 10% ($60/$600), and for someone earning $1,200, it's 8.33% ($100/$1,200), which doesn't illustrate progression.
- In option B, the person earning $600 also has an average tax rate of 10%, but the person earning $1,200 has an average tax rate of 16.67% ($200/$1,200), which does show tax progression appropriate for a progressive tax system.
- Option C reflects a regressive tax situation where both parties pay the same tax regardless of income disparity.
- Option D has a flat tax rate of 10% for both levels of income, which isn't progressive.
Thus, the answer is B: I earn $600 and pay $60 in taxes; you earn $1,200 and pay $200 in taxes, as this best represents the concept of progressive taxes.