ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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flat tax
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progressive tax
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proportional tax
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regressive tax
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Detailed explanation-1: -Definition: Progressive tax is the taxing mechanism in which the taxing authority charges more taxes as the income of the taxpayer increases. A higher tax is collected from the taxpayers who earn more and lower taxes from taxpayers earning less. The government uses a progressive tax mechanism.
Detailed explanation-2: -Under a progressive income tax the average income tax rate rises with income.
Detailed explanation-3: -Income Tax is thus an example of progressive tax. Progressive taxation results in redistribution of income from rich to poor.
Detailed explanation-4: -Answer: Income taxes are progressive because they impose low tax rates on low-income earners and increase rates on those with greater earnings.
Detailed explanation-5: -While direct taxes are progressive, indirect taxes are regressive in nature.