Question

What is meant by progressive tax? A regressive Tax? A proportional tax? Comment on the progressivity or regressively of each of the following taxes, indicating in each case where you think the tax incidence lies: (a) the federal personal income tax, (b) a 4 percent state general sales tax, (c) a federal excise tax on automobile tires, (d) a municipal property tax on real estate, (e)’ the federal corporate income tax, (f) the portion of the payroll tax levied on employers.

Answer 1

Progressive tax is when average rate increase as income increase and they pay in tax a larger portion of the income as it increase. A regressive tax is when average rate decreases as income increases and they pay in taxes a smaller portion of the.

income as income increases. A proportional tax is when the average rate stays the same no matter the income size. A) Moderately progressive, the incident is usual on the taxpayer. B) Regressive, incidence is mostly on the consumers who buy taxed goods. C) Regressive, incidence on the consumer who buys taxed goods. D) Proportional if incidence is on the owner of the property. Regressive if incident is on the consumer of the property if it’s in business. E) Regressive, incidence is on the consumers who buy taxed goods. F) Progressive, incidence is on the employer