Question

If average income tax rates paid by lowest income taxpayers were increased to equality with those paid by the highest income taxpayers, would the US income tax system more or less progressive ? Explain your reasoning .

Short answer

Equalised average income tax rates paid by lowest income group and highest income groups would imply that taxes have become less progressive.

Step-by-step solution

Progressive Tax 

Taxes are progressive if their rates are directly related with level of income - higher tax rates at higher income levels and lower tax rates at lower income levels.

They are based on the rule that marginal (additional) utility of a unit money is more when income is less, and the $M{U}_m$is less when income is more.

These taxes aim to establish income equity

Explanation 

Average Tax Rate $=Totaltaxes/Taxableincome$

If it is same for all (high and low) levels of income, then the proportionate income paid by poor people as taxes is more than proportionate income paid by rise people as taxes.

So, this implies that the taxes have become less progressive.