Scenario 20-2 The Government Is Proposing Switching from a Progressive Tax System

question 446

Multiple Choice

Scenario 20-2
The government is proposing switching from a progressive tax system, in which families pay 15% of the first $40,000 earned, 30% of the next $40,000 earned, and 45% of any income over $80,000 to a tax system in which every family pays 1/4 of its income regardless of how much they earn and all income redistribution is eliminated. That is, the tax revenue generated is used only for infrastructure, public administration, and national defense.
-Refer to Scenario 20-2. Which group would be most in favor of the proposed change in tax policy?

• A)Liberals, because they believe in the maximin criterion.
• B)Libertarians, because they do not believe in redistributing income.
• C)Utilitarians, because they believe in diminishing marginal utility.
• D)None of the above would be in favor of the proposed change.

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