Jessica Furr

EMT 468

October 21, 1996

POW #7

This problem uses simplified models of theoretical tax systems, take into account only those details given.

In a flat rate tax system, every citizen ideally pays a set percent (let's say 15%) of their earnings over some base amount (like $15,000 per year). Compare this to a sliding tax system, like the one below.

This data only represents an example of the rate at particular incomes.

Assume that the rate changes continuously in relation to income.

% paid for taxes 0 5 10 15 20+

annual income <$20,000 20,000 40,000 60,000 80,000

Questions:

1. For what annual income would you pay the same amount of tax in either system?

2. Which type of system favors the poor? the rich?

This data only represents an example of the rate at particular incomes. Assume that the rate changes continuously in relation to income.
% paid for taxes	0	5	10	15	20+
annual income	<$20,000	20,000	40,000	60,000	80,000