ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Definition: Proportional tax is the taxing mechanism in which the taxing authority charges the same rate of tax from each taxpayer, irrespective of income. This means that lower class, or middle class, or upper class people pay the same amount of tax.

Detailed explanation-2: -A proportional tax allows people to be taxed at the same percentage of their annual income. Supporters of a proportional tax system propose that it gives taxpayers incentive to earn more because they are not penalized with a higher tax bracket. Also, flat tax systems make filing easier.

Detailed explanation-3: -flat tax-Another term for a proportional tax. proportional tax-A tax that takes the same percentage of income from all income groups. regressive tax-A tax that takes a larger percentage of income from low-income groups than from high-income groups.

Detailed explanation-4: -With a proportional or flat tax, each individual or household pays a fixed rate. For example, low-income taxpayers would pay 10 percent, middle-income taxpayers would pay 10 percent, and high-income taxpayers would pay 10 percent.

Detailed explanation-5: -GST is an example of proportional tax where everyone pays the same tax irrespective of the income group.