Problem
A city government imposes a proportional income tax on all people who earn income within its city limits. In 2010, the city's income tax rate was 0.05 (5 percent), and it collected $20 million in income taxes. In 2011, it raised the income tax rate to 0.06 (6 percent), and its income tax collections declined to $19.2 million. What happened to the city's income tax base between 2010 and 2011? How could this have occurred?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.