Question

Which types of tax helps in reducing disparities of income?

• A. Proportionate tax
• B. Progressive tax
• C. Regressive tax
• D. All of the above

Answer 1

Answer: (B)

Progressive tax

A progressive tax is a tax in which the tax rate 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.