To determine the type of taxation represented by the table, we must understand the different taxation types:
1. Proportional Taxation: This is a tax system where the tax rate remains constant regardless of the income level. Every individual or company pays the same percentage of their income in taxes.
2. Indirect Taxation: This refers to taxes that are not directly levied on income but are typically applied to the sale of goods and services. Examples include VAT and sales tax.
3. Progressive Taxation: In a progressive tax system, the tax rate increases as the income increases. Higher income earners pay a higher percentage of their income in taxes.
4. Regressive Taxation: In a regressive tax system, the tax rate decreases as the income increases. Lower income earners pay a higher percentage of their income in taxes compared to higher income earners.
Given the table:
[tex]\[
\begin{array}{|c|c|c|}
\hline
\text{Company} & \text{Total Income} & \text{Tax Rate} \\
\hline
\text{A} & \$50 \text{ million} & 10\% \\
\hline
\text{B} & \$100 \text{ million} & 10\% \\
\hline
\text{C} & \$150 \text{ million} & 10\% \\
\hline
\text{D} & \$200 \text{ million} & 10\% \\
\hline
\end{array}
\][/tex]
We notice that each company, regardless of their total income, pays a tax rate of 10%. This confirms that the tax rate does not change with varying income levels. Therefore, each company pays an equal percentage of their income in taxes.
Since the tax rate remains constant across all companies irrespective of their income levels, this best describes a Proportional taxation system.
Therefore, the table best represents
A. Proportional taxation.
