Question

If the tax rate increases with a higher level of income, it  shall be called

Options

• Progressive Tax 

• Proportional Tax

• Lump-sum Tax

• Regressive Tax

Answer 1

Progressive Tax

If the tax rate increases with a higher level of income, it shall be called Progressive Tax

Explanation:

A progressive tax is a tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases. The term “progressive” refers to the way the tax rate progresses from low to high, with the result that a taxpayer’s average tax rate is less than the person’s marginal tax rate.