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Question: Suppose that the income tax in a certain nation is computed as a flat rate of 5 percent, but no tax is levied above $50,000 in taxable income. Taxable income, in turn, is computed as the individuals income minus $10,000; that is, everyone gets a $10,000 deduction. What are the marginal and average tax rates for each of the following three workers? (Evaluate the marginal tax rate at each persons current income level.)

a. A part-time worker with annual income of $9,000.

b. A retail salesperson with annual income of $45,000.

c. An advertising executive with annual income of $600,000.

Is the tax progressive, proportional, or regressive with respect to income?

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