Question

Proportional taxes system is used to ________.

• A. reduces inequalities of income
• B. to promote growth of ssi
• C. to maintain fiscal balance
• D. all the three

Answer 1

Answer: (A)

reduces inequalities of income

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 It can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Proportional taxes maintain equal tax incidence regardless of the ability-to-pay and do not shift the incidence disproportionately to those with a higher or lower economic well-being.