Suppose There Are Two People in a Society

Multiple Choice

Suppose there are two people in a society.The federal tax law states that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%.The federal government allows taxes paid to local governments to be deducted.George earns a gross income of $40,000,and Jorge earns a gross income of $65,000.Out of his income,George pays $1,000 in local taxes; out of his income,Jorge pays $20,000 in local taxes.Which of the following statements is TRUE?

A) George's total (local + federal) tax bill is greater than Jorge's total tax bill.
B) The federal tax system is proportional.
C) The federal tax system is progressive.
D) The federal tax system is regressive.