Team Careers360 20th Jan, 2024

Correct Answer: A tax system where the rich pay a higher percentage of their income than the poor

Solution : The correct answer is (a). A tax system where the rich pay a higher percentage of their income than the poor.

A progressive tax is a tax system in which the tax rate increases as the taxable income or wealth of individuals or entities increases. Under a progressive tax system, higher-income individuals or households are subject to higher tax rates, while lower-income individuals or households face lower tax rates.

The aim of a progressive tax system is to introduce greater tax equity by placing a heavier burden on those who have higher incomes and can afford to contribute more to government revenue. This approach is often based on the principle of ability to pay, as higher-income individuals are seen as having a greater ability to contribute to public services and social welfare.

In a progressive tax system, tax rates are typically structured into different income brackets or tax brackets. As individuals' incomes increase and they move into higher tax brackets, they pay a higher percentage of their income in taxes.