Consider a society with only two people, one who has an income of $200,000 and one who has an income of $20,000. Assume that under the current tax system, the rich person pays

$50,000 in taxes and the poor person pays

$1,000. Suppose Congress passes a law that cuts the rich person’s taxes by $2,000 and the poor person’s taxes by $200. Using Equations

(14.1) and (14.2), assess whether this tax change increases or decreases progressivity.