Question

How is the federal income tax a progressive tax?

A. The higher the income a person has, the higher the percentage that person pays in tax.

B. A person with a higher income pays more tax, but the percentage is less.

C. Two married people who file their taxes together will pay more taxes than a single person will.

D. Children pay no taxes, regardless of whether they earn a large income.

Answer 1

"Progressive" in principle means that the more money you earn, the more tax you pay. However, that would be true of a flat tax (e.g. everybody pays 18%). So in modern debate it has come to mean that the higher the income, the higher *tax rate* you pay. That is, if you earn less than $15,000, you pay minus some percent (the government sends you a check), at higher levels you pay nothing, and when you crack $30-50,000, depending on many factors, you pay about 10%. Thereafter the rate rises fairly steeply, and tops out at 35%.

There are many complications, however, because of the dizzingly array of programs, deductions, kickbacks, and forms of charity hidden in the tax code. There are plenty of places at low income where your "marginal tax rate" (the tax you pay on the next dollar you earn) exceeds 100%. That is, if you earn $1 more, you pay more than $1 in taxes. That's progressivity with a vengeance!

Answer 2

A. The higher the income a person has, the higher the percentage that person pays in tax.