Question

Which one of the following term is used when the tax rate increase with increase in the level of income and vice versa?

A Proportional taxation Correct Answer Incorrect Answer
B Digressive taxation Correct Answer Incorrect Answer
C Regressive taxation Correct Answer Incorrect Answer
D Progressive taxation Correct Answer Incorrect Answer

Solution

In a progressive tax system, the tax rate is designed to increase as the income level of an individual or entity increases. This means that individuals with higher incomes will pay a higher proportion of their income in taxes compared to those with lower incomes.

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