ECONOMICS
INCOME DISTRIBUTION
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Takes less tax from low income earners
|
|
|
Takes a larger percentage of tax from low income earners
|
|
|
Takes a smaller percentage in tax from low income earners
|
|
|
Takes the same percentage in tax from all earners
|
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: -In a progressive tax system, high earners pay a higher tax rate than low earners.
Detailed explanation-3: -> Regressive Taxes: Low-income individuals pay a higher amount of their incomes in taxes compared to high-income earners under a regressive tax system because the government assesses tax as a percentage of the value of the asset that a taxpayer purchases or owns.
Detailed explanation-4: -regressive tax-A tax that takes a larger percentage of income from low-income groups than from high-income groups.
Detailed explanation-5: -Flat Tax vs Progressive Tax Thus, as the individuals’ income shifts to a higher level, the tax rate is imposed at a higher percentage on them. While the flat tax usually doesn’t provide tax exemptions or deductions, the progressive tax offers various exemptions or deductions to the taxpayers.