If Luis Makes $50,000 Per Year as a Computer Programmer

question 52

Multiple Choice

If Luis makes $50,000 per year as a computer programmer and pays $6,000 in taxes while Hector makes $50,000 per year as a roofing contractor and pays $7,000 in taxes, this is an example of

• A) A regressive tax system.
• B) Horizontal inequity.
• C) A flat tax.
• D) Vertical inequity.

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Definitions:

Selling Commission

A fee paid to a sales agent or an employee based on the value of sales generated.

Contribution Margin

The amount remaining from sales revenue after variable production costs have been deducted, indicating how much contributes toward covering fixed costs and generating profit.

Contribution Format

A contribution format income statement categorizes costs as variable or fixed and calculates a contribution margin.

Net Operating Income

Profits from a company's core business operations, excluding deductions of interest and taxes.