Question

Which of the following is the defining feature of a progressive income tax system? Choose one: A. The marginal tax rate is constant across income levels. B. The marginal tax rate is low at low income levels and gets progressively higher as income levels increase. C. The marginal tax rate is low at low income levels and gets progressively higher up to a point. At very high income levels, the marginal tax rate falls. D. All individuals pay the same amount of taxes. E. The marginal tax rate is high at low income

Answer 1

Answer: Option B

   

Explanation: In simple words, it refers to a tax structure in which the tax payer is charged as per his or her ability to pay. Under this system , a lower tax bracket is applied for low income levels and high for high income levels.

The basic assumption for applying such structure is that the high class have earned that money from the resources of the lower class thus they have to give a higher share from their income so that the lower class could be developed from that money.