Arthur pays tax of $5,000 on taxable income of $50,000 while taxpayer Barbara pays tax of $12,000 on $120,000. The tax is a:
a) progressive tax
b) proportional tax
c) regressive tax
d) none of the above
The internal revenue service (IRS) has different taxes for income and investments. Investments are often taxed at capital gain rates whereas income is typically taxed at the income rates.
Answer and Explanation: 1
Answer choice: a) proportional tax
A proportional tax charges the same tax percentage on all taxpayers regardless of their income. In...
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fromChapter 3 / Lesson 5
Learn what income tax liability is. Find out what taxable and adjusted gross income are, discover how to calculate tax liability, and examine common deductions.