Answered

A state taxes its residents at different rates using
income tax brackets, with higher incomes taxed at
higher rates. How is this tax categorized?
A regressive
B proportional
C flat
D progressive

Verified Answer :

GinnyAnswer

Final answer:

A progressive tax system taxes higher incomes at higher rates, regressive tax burdens lower incomes more, and proportional tax imposes the same rate on everyone.


Explanation:

Progressive Tax: A progressive tax system imposes higher rates on individuals with higher incomes. It divides income into brackets, where higher earners are taxed at higher rates. For example, income over $100,000 may be taxed at 20% while income below that threshold is taxed at 10%.

Regressive Tax: In contrast, a regressive tax system places a higher burden on lower-income individuals. An example is a sales tax, where lower-income earners end up paying a higher proportion of their income compared to higher-income earners.

Proportional Tax: Also known as a flat tax, proportional tax imposes the same tax rate on everyone, regardless of income level. If the tax rate is 10%, all individuals, irrespective of their income, pay 10% of their earnings as tax.


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