A progressive tax system is one where ?
Correct answer: D. higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers.
- A. marginal tax rates are high.
- B. higher income taxpayers pay more taxes than do lower income taxpayers.
- C. marginal tax rates are low.
- D. higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers.
Explanation
Progressivity concerns tax burdens as a percentage of income: higher-income taxpayers pay a larger percentage than lower-income taxpayers. Merely paying more rupees does not prove progressivity because higher earners may pay more under any tax system.
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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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