You are trying to design a tax system that will simultaneously achieve both of the following goals: 1) two people with the same total income would pay taxes of the same amount, and 2) a high-income person would pay a higher fraction of income in taxes than a low-income person. Which of the following tax systems could achieve both goals?
A)a lump-sum tax
B)a regressive tax
C)a progressive tax
D)a proportional tax

Question

Quizplus · Accepted Answer

A progressive tax system is designed in a way that the tax rate increases with the increase in income. This achieves the second goal of having high-income people pay a higher fraction of income in taxes. To achieve the first goal, the tax brackets or rates would be adjusted so that people with the same total income are paying the same amount of taxes. Therefore, a progressive tax system can achieve both of the given goals.

You Are Trying to Design a Tax System That Will