(a) Disposable Income = Income - Tax
(i) Doctor = $8,000 - (10% of $8,000)
= $8,000 - $800
= $7,200
(ii) Engineer= $7,000 - (12% of $7,000)
= $7,000 - $840
= $6,160
(iii) Civil Servant = $5,000 - (18% of $5,000)
= $5,000 - $900
= $4, 100
(iv) Nurse = $6,000 - (15% of $6,000)
= $6,000 - $900
= $5, 100
(b) Regressive system of taxation
(c) Regressive because the higher income earners pay lower rate of tax while low income earners pay higher rate of tax.
(d)
In the diagram above, the curve is negatively sloped indicating that higher income earners are levied at lower tax rate and vice versa. A regressive system of taxation is one in which the higher income earners pay a lower rate of tax while the lower income earners pay a higher rate of tax.