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Suppose there are two people in a society. The federal tax law states that the first $20,000 of income is taxed at 10% and income above that is taxed at 30%. The federal government allows taxes paid to local governments to be deducted. George earns a gross income of $40,000, and Jorge earns a gross income of $65,000. Out of his income, George pays $1,000 in local taxes; out of his income, Jorge pays $20,000 in local taxes. Which of the following statements is TRUE?
(a)The federal tax system is progressive.
(b)The federal tax system is proportional.
(c) The federal tax system is regressive.
(d) George's total (local + federal) tax bill is greater than Jorge's total tax bill.
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