Question

the total amount someone pays in taxes depends on their income. but there are different ways to determine how much money people should pay. some states have a flat tax, meaning that the tax rate is the same regardless of income. but the federal income tax is progressive, meaning that the tax rate is higher for higher incomes.
compare an example of flat and progressive taxes in the table below. then answer the question.
whose tax rates would be lower under the flat tax system, compared with the progressive tax system?
someone earning $25,000 a year
someone earning $60,000 a year
someone earning $90,000 a year
someone earning $700,000 a year

Explanation:

Step1: Determine tax rate for each income under both systems

• For someone earning $25,000$: Flat tax rate = $20\%$, Progressive tax rate = $10\%$.
• For someone earning $60,000$: Flat tax rate = $20\%$, Progressive tax rate = $15\%$.
• For someone earning $90,000$: Flat tax rate = $20\%$, Progressive tax rate = $20\%$.
• For someone earning $700,000$: Flat tax rate = $20\%$, Progressive tax rate = $25\%$.

Step2: Compare tax rates

• For $25,000$: $20\%>10\%$ (flat tax rate higher).
• For $60,000$: $20\%>15\%$ (flat tax rate higher).
• For $90,000$: $20\% = 20\%$ (rates equal).
• For $700,000$: $20\%<25\%$ (flat tax rate lower).

Answer:

someone earning $700,000$ a year