To identify the type of taxation represented in the table, we need to closely examine how the tax rates change with respect to the total income of the companies.
The table is as follows:
[tex]\[
\begin{tabular}{|l|c|c|}
\cline{2-3}
\multicolumn{1}{l|}{} & \text{Total income} & \text{Tax rate} \\
\hline
\text{Company A} & \$50 \, \text{million} & 20\% \\
\hline
\text{Company B} & \$100 \, \text{million} & 15\% \\
\hline
\text{Company C} & \$150 \, \text{million} & 12\% \\
\hline
\text{Company D} & \$200 \, \text{million} & 10\% \\
\hline
\end{tabular}
\][/tex]
Let's analyze the trend in tax rates as the total income increases:
1. Company A: Total income = \[tex]$50 million, Tax rate = 20%
2. Company B: Total income = \$[/tex]100 million, Tax rate = 15%
3. Company C: Total income = \[tex]$150 million, Tax rate = 12%
4. Company D: Total income = \$[/tex]200 million, Tax rate = 10%
Notice that as the total income of the companies increases, the tax rate decreases:
- From 20% to 15%
- From 15% to 12%
- From 12% to 10%
This trend indicates that higher-income companies are subject to lower tax rates.
Now, let's understand the types of taxation:
- Proportional Taxation: The tax rate remains constant regardless of the income.
- Regressive Taxation: The tax rate decreases as the taxable amount (income) increases.
- Indirect Taxation: Taxes levied on goods and services rather than on income.
- Progressive Taxation: The tax rate increases as the taxable amount (income) increases.
Given the observed trend where the tax rate decreases as income increases, the described taxation system fits the definition of Regressive Taxation.
Thus, the table best represents:
B. Regressive
