2. Taxation

Question 1

Everyone pays the same % of income taxes
- Check wording: % or $
- Tax divided by income

Answer 1

Proportional

Question 1

Higher income > higher % of income taxes
- Check wording: % or $
- Tax divided by income
- After finding who pays what % of taxes, check who has a higher pay

Answer 1

Progressive

Question 2

Higher income > less % of income taxes
- Check wording: % or $
- Tax divided by income

Answer 2

Regressive

Question 3

• Tax rate vs. Tax revenue
• Tax rev. = tax base x tax rate
• 2 different tax rates can generate same tax revenues
• Decrease in the tax rate can generate an increase tax revenue

Answer 3

Laffer Curve