The country of Boodang is the leading producer of sausage.
Boodang imposes three taxes on its residents and companies to encourage
production of sausage and discourage its consumption. Each tax applies as
follows:

·        
Income tax—Rates apply to each taxpayer’s total income:

$ -0- –$ 50,000                   5%
of total income

$ 50,001–$200,000           $ 2,500
+ 10% of income in excess of $ 50,000

$200,001–$500,00
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The country of Boodang is the leading producer of sausage.
Boodang imposes three taxes on its residents and companies to encourage
production of sausage and discourage its consumption. Each tax applies as
follows:

·        
Income tax—Rates apply to each taxpayer’s total income:

$ -0- –$ 50,000                   5%
of total income

$ 50,001–$200,000           $ 2,500
+ 10% of income in excess of $ 50,000

$200,001–$500,000          $17,500
+ 20% of income in excess of $200,000

$500,001 or more                                 40%
of total income

In calculating total income, sausage workers are allowed to
deduct 25% of their salaries. Companies that produce sausage are allowed to
deduct 50% of their sales. No other deductions are allowed.

·        
Sausage tax—All sausage purchases are subject to a 100% of
purchase price tax. Residents who consume less than 10 pounds of sausage per
year are given a 50% rebate of the sausage tax they paid.

·        
Property tax—Taxes are based on the distance of a taxpayer’s
residence from stateowned sausage shops per the following schedule:

0–2 miles                            $15,000
per mile

2 miles–5 miles
               $ 5,000 per mile

5 miles or more                $
2,000 per mile

Given the definitions in the chapter, are Boodang’s taxes
progressive, proportional, or regressive? Evaluate and discuss each tax and the
aspect(s) of the tax that you considered in making your evaluation.

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