Festwalia has two types of workers: low-skill workers, who earn $10 per hour, and high-skill workers, who

Question:

Festwalia has two types of workers: low-skill workers, who earn $10 per hour, and high-skill workers, who earn $20 per hour. The government of Festwalia currently imposes a 20% proportional tax on all labor earnings. It is considering replacing this tax with a new, regressive tax. The new tax system will raise the same total revenue as the original system, but it will do so by taxing the low-skill workers at a rate above 20% and exempting the high-skill workers from paying any tax at all. Will this new, regressive tax system be more or less efficient than the old, proportional tax system?
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: