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Regressive vs. Progressive Taxation: An Analysis of Two Families and Two States, Study notes of Business Taxation and Tax Management

Monteclaro Escuela de Hoteleria y Artes CulinariasBusiness Taxation and Tax Management

This document compares the impact of regressive and progressive taxation on two families and two states, using examples of gas taxes and income taxes. It highlights the differences in tax burdens between families and states with varying incomes and tax rates.

What you will learn

  • What is the difference between regressive and progressive taxation?
  • Which state has a higher average tax rate: State A or State B?
  • Which family pays a larger share of their income in taxes: Family #1 or Family #2?

Typology: Study notes

2021/2022

Uploaded on 09/12/2022

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Regressive Tax Example
Regressive
Tax
Example
Family #1
Family #2
Family
#1
Income: $30,000
Family
#2
Income: $300,000
Gallons gasoline: 1,000 Gallons gasoline: 1,000
Gas tax: $0.30/gallon Gas tax: $0.30/gallon
Yearly gas tax: $300
Tax as share of income: 1%
Yearly gas tax: $300
Tax as share of income: 0 1%
Tax
as
share
of
income:
1%
Tax
as
share
of
income:
0
.
1%
pf3

Partial preview of the text

Download Regressive vs. Progressive Taxation: An Analysis of Two Families and Two States and more Study notes Business Taxation and Tax Management in PDF only on Docsity!

Regressive Tax ExampleRegressive

Tax Example

Family

Family

Family #1 Income: $30,

Family

Income: $300,

Gallons gasoline: 1,

Gallons gasoline: 1,

Gas tax: $0.30/gallon

Gas tax: $0.30/gallon

Yearly gas tax: $300Tax as share of income: 1%

Yearly gas tax: $300Tax as share of income: 0 1%

Tax as share of income: 1%

Tax as share of income: 0.1%

Per Capita TaxesPer

Capita Taxes

State A: Average or per capita taxes = $1,800State B: Average or per capita taxes = $2,400 Which state has higher taxes?What if told? •^

Average income in State A is $30,

-^

Average income in State B is $60,

Which state has higher taxes? •^

Average tax rate in State A is 6 percent of incomeA^

t^

t^

i^

St t

B i

t^

f i

-^

Average tax rate in State B is 4 percent of income