Question : The rate of tax increase as the amount of the tax base increases is called
Option 1: proportional tax
Option 2: progressive tax
Option 3: regressive tax
Option 4: degressive tax
Correct Answer: progressive tax
Solution : The correct answer is a progressive tax .
A progressive tax rate or progressive taxation is a tax rate that grows as the extent of the tax base (the taxable amount or value) increases. Larger-income people or corporations pay a higher percentage of their income or the value of the taxable base in taxes under a progressive tax system. This is typically related to income taxes in many nations and is frequently used to distribute the tax burden more equally.
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