What is the average tax rate of someone with a taxable
income of $13,766?
There are three income earners in society, and all three
must pay income taxes.The taxable income of Smith is
$40,000, the taxable income of Jones is $100,000, and
the taxable income of Brown is $200,000.
a How much tax revenue is raised under a proportional income tax where the tax rate is 10 percent?
15 percent?
b Would a progressive tax with a rate of 5 percent on
an income of $0–$40,000, a rate of 8 percent on
everything over $40,000 and under $100,000, and
a rate of 15 percent of everything over $100,000
raise more or less tax revenue than a proportional
tax rate of 10 percent? Explain your answer.