ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Taxes designed to reduce external costs.
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A tax designed to induce private decision makers to take account of the social costs that arise from a negative externality.
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A tax in which the average tax rate increases with income.
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A tax in which the average tax rate decreases as income increases.
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A tax in which the average rate of tax is constant regardless of income level.
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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 is an income tax system that levies the same percentage tax to everyone regardless of income. A proportional tax is the same for low, middle, and high-income taxpayers. Proportional taxes are sometimes referred to as flat taxes.
Detailed explanation-3: -Question: What are some examples of Proportional taxes? 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: -A. Charged at a decreasing rate when income of the individual increases.
Detailed explanation-5: -Progressive taxation policy essentially imposes tax on the income earned or the profit made by the assessee on the basis of an increasing schedule of rates. Conversely, under a regressive tax system, taxes are charged as a proportion of the assets either purchased or owned by an assessee.