Question

Margaret had taxable income of $15,000 and paid $3,000 of income tax; Marshawn had taxable income of $50,000 and paid $10,000 of income tax. The tax rate structure they are subject to is:

Multiple Choice

Recessive.


Progressive.


Proportional.


Regressive.

Answer 1

To determine the type of tax rate structure being applied in this scenario, we can look at the ratio of income tax paid to taxable income for both individuals.

1. **Margaret**:
- Taxable income = $15,000
- Income tax paid = $3,000
- Tax rate = (Income tax / Taxable income) = $3,000 / $15,000 = 0.20 or 20%

2. **Marshawn**:
- Taxable income = $50,000
- Income tax paid = $10,000
- Tax rate = (Income tax / Taxable income) = $10,000 / $50,000 = 0.20 or 20%

Both individuals have the same tax rate of 20%. This indicates that the tax structure is proportional, meaning that everyone pays the same percentage of their income in taxes, regardless of the level of income.

Thus, the correct answer is:

**Proportional.**