A tax whose burden expressed as a percentage of income, falls as income increases is a ?
Correct answer: C. regressive tax
- A. benefits received tax
- B. progressive tax
- C. regressive tax
- D. proportional tax
Explanation
A regressive tax takes a smaller percentage of income as income rises, so its relative burden falls on higher-income households. A progressive tax has the opposite pattern, while a proportional tax takes the same percentage from everyone.
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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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