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Pugsly earns $50,000 each year and pays $5,000 in income taxes. Wednesday earns $70,000 per year and pays $7,000in income taxes. This is an example of which type of tax?

progressive tax
regressive tax
proportional tax

1 answer

To determine the type of tax being described, we can analyze the income tax payments of Pugsly and Wednesday relative to their incomes.

  • Pugsly earns $50,000 and pays $5,000 in taxes, which is 10% of his income.
  • Wednesday earns $70,000 and pays $7,000 in taxes, which is also 10% of her income.

Since both individuals pay the same percentage of their income in taxes, this situation represents a proportional tax system, where the tax rate is the same regardless of income level.

Therefore, the correct answer is proportional tax.