ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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____ has the same rate of tax on all income levels.
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____ is proportionately smaller for low income earners.
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____ is small in proportion to a regressive tax.
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____ is always more effective than other taxes.
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Detailed explanation-1: -A proportional tax is one that imposes the same relative burden on all taxpayers-i.e., where tax liability and income grow in equal proportion.
Detailed explanation-2: -Under the proportional tax system, all tax payers pay an equal proportion of income in the form of taxes. Q. A tax whose rate remains the same irrespective of the increase in income level. Which of the taxes given above are Ad valorem tax/taxes?
Detailed explanation-3: -Answer: Proportional taxation is a tax technique in which the taxing body applies the same tax rate to all taxpayers, regardless of their income. Proportional taxes include sales taxes, tithes, and some state income tax rates.
Detailed explanation-4: -According to Dalton, “In proportional taxation all the tax payers pay their taxes according to the equal proportion of this income”. Progressive Tax-Progressive tax system is a system in which not only the income increases as well as the rate of tax. Its principle is, “More income, more rate of tax”.