MANAGEMENT

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: -In a proportional tax system, all taxpayers are required to pay the same percentage of their income in taxes. For example, if the rate is set at 20%, a taxpayer earning $10, 000 pays $2, 000 and a taxpayer earning $50, 000 pays $10, 000. Similarly, a person earning $1 million would pay $200, 000.

Detailed explanation-3: -With a proportional or flat tax, each individual or household pays the same 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-4: -GST is an example of proportional tax where everyone pays the same tax irrespective of the income group.

Detailed explanation-5: -Under a regressive tax system, low-income earners pay a higher amount of taxes than high-income earners. Under a proportional tax system, low-, middle-, and high-income earners pay the same tax rate. Proportional tax is also called flat tax.