Question

According to Saez and Zucman, which is the best description of the current US tax system?

A mostly proportional system that turns regressive at the highest income levels.

A mostly regressive system that turns progressive at the lowest income levels.

A system with a high degree of progressivity.

A system with mostly regressive taxes.

Answer 1

Answer : (a) A mostly proportional system that turns regressive at highest income levels

In the United States, they have a progressive proportional tax system where people are taxed proportionally according to their wealth. The people in the bottom half do not pay much in Income taxes. And as a fraction of income, when you earn more, you pay tax more.

But when the case of top class citizens, the country's taxation system turns regressive. The tax rates are merely 23% when it comes to the top class. This is less than the taxation percentage demanded from the middle class. This is where the taxation system turns regressive.