Which Statement Best Describes the Overall Tax and Transfer Systems

question 13

Multiple Choice

Which statement best describes the overall tax and transfer systems of the United States?

• A) Our tax system makes the after-tax distribution of income much more equal than the before-tax distribution.
• B) Our tax system does not by itself reallocate income; transfer payments help redistribute income from rich to poor.
• C) Although some federal taxes are progressive, this effect is more than offset by the regressivity of state and local taxes, which make the overall system extremely regressive.
• D) Recent changes in corporate income taxes and payroll taxes have made our overall tax system more progressive.