Which of the following best describes a progressive tax system?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Tax rate increases as the taxable amount increases.
A progressive tax system is one in which the tax rate increases as the taxable income or amount increases. This means higher-income individuals pay a larger percentage of their income in taxes compared to lower-income individuals, making the system more equitable and redistributive.
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Higher tax rate for corporations than individuals: Incorrect — not the defining feature.
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Tax rate decreases as taxable amount increases: Incorrect — that describes a regressive tax.
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Uniform tax rate for all income groups: Incorrect — that describes a proportional or flat tax.