A shift to an equal-yield, flat-rate personal income tax from the current progressive income tax rate structure will:

Question

BlackTom AI · Accepted Answer

Progressive tax systems impose higher average rates on higher incomes, while a flat equal-yield rate charges everyone the same percentage of income. That difference is the key to how tax burdens shift.

1) Relevant knowledge points and concepts
- Progressive tax: average tax rate increases with income, so high-income households pay a larger share of total taxes.
- Flat (proportional) tax: everyone pays the same percentage of income.
- Equal-yield flat-rate: the flat rate is set so total revenue equals revenue under the progressive system (revenue-neutral).
- Distributional effect: comparing tax payments and shares across income groups shows who gains or loses.

2) Step-by-step reasoning with a numerical illustration
Assume three taxpayers: Low = $30,000, Middle = $60,000, High = $150,000.
Under a representative progressive outcome (average rates for illustration): Low pays 5% → $1,500; Middle pays 12% → $7,200; High pays 25% → $37,500. Total tax revenue = $46,200; total income = $240,000.
Equal-yield flat rate = $46,200 / $240,000 = 19.25%.
Under the flat rate: Low pays 30,000 × 0.1925 = $5,775; Middle 60,000 × 0.1925 = $11,550; High 150,000 × 0.1925 = $28,875.

3) Intermediate steps and comparison
- Low: $1,500 → $5,775 (increase)
- Middle: $7,200 → $11,550 (increase)
- High: $37,500 → $28,875 (decrease)
Shares of total tax: Progressive = Low 3.25%, Middle 15.6%, High 81.2%. Flat = Low 12.5%, Middle 25.0%, High 62.5%. Thus lower-income shares rise; upper-income share falls.

4) Why the correct answer is correct
Because the flat equal-yield rate reduces the high-income average tax rate compared with the progressive schedule and raises the rate faced by lower-income groups (to keep revenue constant), the tax burden shifts away from upper-income groups toward lower-income groups.

5) Why other options are incorrect
- “Increase the tax burden on upper-income groups only” and “increase the share paid by lower-income groups only” ignore that redistribution occurs in both directions (upper-income falls, lower-income rises).
- “Reduce the tax burden on upper-income groups only” ignores that lower-income groups also see their share increase.

Conclusion: The correct choice is “reduce the tax burden on upper-income groups and increase the share of taxes paid by lower-income groups,” which matches the provided answer.

A shift to an equal-yield, flat-rate personal income tax from the current progressive income tax rate structure will:单项选择题

类似问题

Choose A, B, C or D as the best answer.4. Which statement best summarises the main idea of this paragraph?

What is the purpose of the anti-fragmentation rule introduced under BEPS?

2. Apart from income tax, the main Australian tax is GST at %Answer Question 2[input].

Which of the following statements about super contributions in Australia is most accurate?

Which of the following taxes is likely to be most favorable for capital accumulation?

Which is a justification for tax preferences?

Because of the Earned Income Tax Credit, the effective tax rate for the lowest-income taxpayers in the United States is:

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单