Suppose a special tax was introduced that used the value of ones automobile as the tax base.

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Suppose a special tax was introduced that used the value of one’s automobile as the tax base. Each person would pay taxes equal to 10 percent of the value of his or her car. Would the tax be proportional, regressive, or progressive? What assumptions do you make in answering this question? What distortions do you think would appear in the economy if such a tax were introduced?

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