Question

A tax that takes away a higher proportion of one's income as the income rises in termed as ________________.

• A. Progressive tax
• B. Proportional tax
• C. Regressive tax
• D. Indirect tax

Answer 1

The correct option is A Progressive tax

Progressive taxation is when the income tax levied on individual increases as his/her income increases. This kind of income tax is both good and bad. Good because the richer or high earners are taxed higher and poor dont get much pressure. In a way it is bad for the same reason as the high income earners might lose the motivation to earn more due to higher taxes.