### 5.1 Flat Tax & Political Philosophy

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• 9. Regressive, Flat, or Progressive

Determine whether the tax is regressive, flat, or progressive. Explain your reasoning. (See Example 3.)

Social Security tax of 6.2% on earnings up to \$106,800

• Worked-Out Solution

Social Security taxes are regressive because they apply only to earnings up to a certain amount. In 2011, the maximum Social Security tax paid by an employee was 6.2% of \$106,800.

(A self-employed person would have paid a maximum of twice this amount.)

If an employed person earned \$200,000, he or she would still have paid only \$6621.60, which means that the percent paid on total income would be less than 6.2%. This implies that the tax is regressive.

From its inception, Social Security tax has been regressive. In 1994, however, Medicare tax was split off from Social Security tax. At that time, the income cap on Medicare was removed, making it a flat tax.

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```  _  __     ___                _____
| |/ //   / _ \\      ___    |  ___||     ___
| ' //   / //\ \\    /   ||  | ||__      /   ||
| . \\  |  ___  ||  | [] ||  | ||__     | [] ||
|_|\_\\ |_||  |_||   \__ ||  |_____||    \__ ||
`-` --` `-`   `-`     -|_||  `-----`      -|_||
`-`                 `-`
```
• 10. Regressive, Flat, or Progressive

Determine whether the tax is regressive, flat or progressive. Explain your reasoning. (See Example 3.)

17% income tax on all income over \$12,500

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``` ______     ______    _____    __   __  __    __
|      \\  /_   _//  / ____||  \ \\/ // \ \\ / //
|  --  //   -| ||-  / //---`'   \ ` //   \ \/ //
|  --  \\   _| ||_  \ \\___      | ||     \  //
|______//  /_____//  \_____||    |_||      \//
`------`   `-----`    `----`     `-`'       `

```
• 11. Regressive, Flat, or Progressive

Determine whether the tax is regressive, flat, or progressive. Explain your reasoning. (See Example 3.)

19% income tax on all income

• Worked-Out Solution

This is a flat tax because it is the same percent on all income.

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```  _____     ______               ___     __   _
|__  //   /_   _//   ____      / _ \\  | || | ||
/ //     -| ||-   |    \\   | / \ || | '--' ||
/ //__    _| ||_   | [] ||   | \_/ || | .--. ||
/_____||  /_____//  |  __//    \___//  |_|| |_||
`-----`   `-----`   |_|`-`     `---`   `-`  `-`
`-`
```
• 12. Regressive, Flat, or Progressive

Determine whether the tax is regressive, flat or progressive. Explain your reasoning. (See Example 3.)

7% sales tax

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```  _____      ___    __    __   __   __    _  __
/  ___||   / _ \\  \ \\ / //  \ \\/ //  | |/ //
| // __    / //\ \\  \ \/ //    \ ` //   | ' //
| \\_\ || |  ___  ||  \  //      | ||    | . \\
\____//  |_||  |_||   \//       |_||    |_|\_\\
`---`   `-`   `-`     `        `-`'    `-` --`

```
• 13. Connecticut State and Local Taxes

The income for a family in the middle 20% is \$58,000. How much, in dollars, does this family pay for each type of tax? (See Example 4.)

• Worked-Out Solution

For a family with an income of \$58,000, the taxes are as follows.

 Sales & excise taxes: Property taxes: Income taxes:

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```  ______   _    _     _____      ___    __    __
/_   _// | || | ||  |__  //    / _ \\  \ \\ / //
| ||   | || | ||    / //    / //\ \\  \ \/ //
_| ||   | \\_/ ||   / //__  |  ___  ||  \  //
/__//     \____//   /_____|| |_||  |_||   \//
`--`       `---`    `-----`  `-`   `-`     `

```
• 14. Connecticut State and Local Taxes

The income for a family in the top 1% is \$3,160,000. How much, in dollars, does this family pay for each type of tax? (See Example 4.)

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``` ______      ___      ____     __   __   _____
|      \\   / _ \\   |  _ \\   \ \\/ // |  __ \\
|  --  //  / //\ \\  | |_| ||   \ ` //  | |  \ ||
|  --  \\ |  ___  || | .  //     | ||   | |__/ ||
|______// |_||  |_|| |_|\_\\     |_||   |_____//
`------`  `-`   `-`  `-` --`     `-`'    -----`

```
• 15. Connecticut Classifying Taxes

Determine whether the three types of taxes are regressive, flat, or progressive in Connecticut. Explain your reasoning. (See Example 4.)

• Worked-Out Solution
 Sales & excise taxes: The rate decreases as income increases. These taxes are regressive. Property taxes: The rate decreases as income increases. These taxes are regressive. Income taxes: The rate increases as income increases. These taxes are progressive.

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```             ___     __   __     ___      _____
____      / _ \\   \ \\/ //   / _ \\   |__  //
|    \\   / //\ \\   \   //   | / \ ||    / //
| [] ||  |  ___  ||  / . \\   | \_/ ||   / //__
|  __//  |_||  |_|| /_//\_\\   \___//   /_____||
|_|`-`   `-`   `-`  `-`  --`   `---`    `-----`
`-`
```
• 16. Classifying Connecticut Taxes

Are taxes, as a whole, regressive, flat, or progressive in Connecticut? Explain your reasoning.(See Example 4.)

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