A tax for which high income taxpayers pay a smaller fraction of their income than do low income taxpayers is known as ?
Correct answer: B. a regressive tax
- A. a proportional tax
- B. a regressive tax
- C. an equitable tax
- D. a progressive tax
Explanation
A regressive tax takes a smaller percentage of income as income rises, so its burden falls relatively more heavily on low-income taxpayers. A progressive tax does the opposite.
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About Public Finance
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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