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.

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