Which situation most clearly represents a regressive tax burden?
Correct answer: C. The tax takes a larger income share from poorer households
- A. The tax burden is based only on company profit
- B. The tax rate rises with each income bracket
- C. The tax takes a larger income share from poorer households
- D. The tax is assessed after an annual audit
Explanation
A regressive tax takes a greater proportion of income from lower-income taxpayers than from higher-income taxpayers. A rising rate by income bracket describes a progressive tax, not a regressive one.
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About Taxation
Taxation covers the principles used to assess and collect taxes from individuals, businesses and transactions, with emphasis on income tax and sales tax concepts in Pakistan. Questions involve taxable income, exemptions, deductions, tax liability, withholding, returns, assessment, tax avoidance versus evasion, and the distinction between direct and indirect taxes.
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