Scenario 20-1 The Government Is Proposing Switching from a Progressive Tax System

question 216

Multiple Choice

Scenario 20-1
The government is proposing switching from a progressive tax system in which families pay 15% of the first $50,000 earned, 25% of the next $50,000 earned, and 35% of any income over $100,000 to a tax system in which every family pays 20% of their income less $20,000.
-Refer to Scenario 20-1. What would the libertarians think of the proposed policy change?

• A)They would favor the current progressive policy over the proposed policy because it accounts for diminishing marginal utility.
• B)They would favor the proposed tax policy over the current progressive policy because it would result in a negative tax for the poorest families.
• C)They would favor the current progressive tax policy over the proposed policy because it rewards those who work the hardest.
• D)They would oppose both tax policies because both redistribute income.

---

Definitions:

Metric Equivalent

The corresponding value of a unit of measure expressed in the International System of Units (SI).

Liter

A metric unit of volume equivalent to 1,000 cubic centimeters or about 0.26 gallons.

Household Measurement

A system of units used in everyday domestic tasks, such as cooking and home repair, often including tablespoons, cups, meters, and feet.

Ounce

A unit of weight in the avoirdupois system, equivalent to 28.3495 grams, commonly used in the United States and the United Kingdom.