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5. Assume that in a given country, tax revenue, T, depends on income, I, according to the formula
T = -4,000 + 0.21
Thus, for example, when a household has an income of $50,000, its tax burden is
-4,000+0.2(50,000), or $6,000. Is this a progressive tax schedule? [Hint: compute average tax
rates at several different levels of income.]
Now let's generalize the tax schedule in this problem to
T= att
where a and t are numbers. Write down a formula for the average tax rate as a function of the
level of income. Show that the tax system is progressive if a is negative, and regressive if a is
positive.

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