2. Progressive and regressive tax systems Aa Aa The following table shows the ta

Question

2. Progressive and regressive tax systems Aa Aa The following table shows the taxable income and tax liability for three single individuals in a certain country. For example, a person with an income of $10,000 has to pay $1,800 in taxes. Taxable Income $10,000 $20,000 $30,000 Tax Liability $1,800 $3,000 $3,600 Average Tax Rate Using the tax liability figures given, compute the average tax rate (that is, the proportion of income paid in tax) for an individual with an income of $10,000, $20,000, and $30,000, respectively. Then fill in the last column of the table with these values. The income tax system for this country is

Explanation / Answer

Answer : Showing Table information about :

Average tax rate = x

Taxable income *x/100 = Tax liability

The income tax of the country is regressive system as income of the payer increases the average tax rate has been decreased.This can be shown in table also.

18%

15%

Taxable income Tax liability Average tax rate 10,000 1800

18%

20,000 3000

15%

30,000 3600 12%

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