A tax is found to have the following effect. It takes an average of $20 from people with an income of $2000, $40 from people with an income of $5000, and $70 from people with an income of $10,000. This tax is:

proportional.
retroactive.
regressive.
progressive.
levied on the ability to pay.


When the burden or incidence of a tax is borne by someone other than the one who is legally obliged to pay the government, economists say that the tax is:

regressive.
a valued-added tax.
shifted.
a subsidy.


Back to Reading Overview Next Page