- The data shows that as income increases from \(\$10,000\) to \(\$100,000\), the tax rate increases from \(10\%\) to \(30\%\).
- A system where tax rates increase as income rises is defined as a progressive tax system.
- Rohan pays the lowest percentage of his income (\(10\%\)) compared to Nikkita (\(20\%\)) and Ahmed (\(30\%\)).
- Therefore, the system is \(\boxed{\text{progressive}}\) and the individual who benefits most is \(\boxed{\text{Rohan}}\).
Explanation
- Analyzing the Data
The problem provides data on three individuals: Rohan, Nikkita, and Ahmed, detailing their income, tax rate, and the taxes they owe.
- Rohan: Income = \(\$10,000\), Tax Rate = \(10\%\), Taxes Owed = \(\$1,000\).
- Nikkita: Income = \(\$50,000\), Tax Rate = \(20\%\), Taxes Owed = \(\$10,000\).
- Ahmed: Income = \(\$100,000\), Tax Rate = \(30\%\), Taxes Owed = \(\$30,000\).
To understand the nature of this tax system, we compare the income of each individual with their corresponding tax rate. A tax system is classified as progressive if the tax rate increases as the taxpayer's income increases, regressive if the tax rate decreases as income increases, and proportional if the tax rate remains constant across all income levels.
- Classifying the Tax System
We observe the relationship between income and tax rate for the individuals:
- As the income increases from \(\$10,000\) (Rohan) to \(\$50,000\) (Nikkita) and then to \(\$100,000\) (Ahmed), the tax rate correspondingly increases from \(10\%\) to \(20\%\) and then to \(30\%\).
Since the tax rate rises in direct correlation with the increase in income, the tax system is categorized as a progressive tax system. In this structure, individuals with higher incomes are required to pay a higher percentage of their income in taxes.
- Identifying Who Benefits Most
To determine who benefits most from the policy, we look at the effective tax burden each individual faces, which is represented by their tax rate. The individual who benefits most is the one who pays the lowest percentage of their income in taxes.
- Rohan pays \(10\%\) of his income.
- Nikkita pays \(20\%\) of her income.
- Ahmed pays \(30\%\) of his income.
Because Rohan pays the lowest percentage of his income (\(10\%\)), he faces the smallest relative tax burden among the three individuals, meaning he benefits most from the policy.
- Final Conclusion
Based on our analysis, we have determined that the tax system is progressive, and the individual who pays the lowest relative tax rate is Rohan. Therefore:
- The tax system is a \(\boxed{\text{progressive}}\) tax system.
- The individual who benefits most from this policy is \(\boxed{\text{Rohan}}\).
Examples
Understanding tax systems is crucial for managing personal finances and evaluating economic policies. For example, knowing whether your country uses a progressive, regressive, or proportional tax system helps you estimate your take-home pay and understand how your contribution to public services changes as your career advances and your salary grows. Learning these concepts provides a foundation for making informed financial decisions and participating in discussions about public economic policy.