3
Select the correct answer.
How does the rate of a proportional tax change with income?
A.
The rate increases as income increases.
O B.
C.
The rate remains the same, even if income increases or decreases.
The rate decreases as income increases.
○ D.
The rate decreases as income decreases.
Reset
xt

Question

tdotson411 tdotson411

04-05-2024
Business

Answered

3
Select the correct answer.
How does the rate of a proportional tax change with income?
A.
The rate increases as income increases.
O B.
C.
The rate remains the same, even if income increases or decreases.
The rate decreases as income increases.
○ D.
The rate decreases as income decreases.
Reset
xt

Answer :

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GinnyAnswer GinnyAnswer · Answer 1 · 2024-05-04T00:05:54-04:00

The correct answer is: B. The rate remains the same, even if income increases or decreases. Explanation: In a proportional tax system, also known as a flat tax, the tax rate stays constant regardless of the individual's income level. This means that as income increases or decreases, the percentage of income paid in taxes remains the same. For example, if the proportional tax rate is 10%, someone earning $10,000 would pay $1,000 in taxes, and someone earning $100,000 would pay $10,000 in taxes, maintaining the 10% rate. This distinguishes it from a progressive tax system where the tax rate increases as income rises, or a regressive tax system where the tax rate decreases as income increases.