Question

Why is the federal income tax a progressive tax?

A. A higher income has more deductions.
B. A higher income pays a lower rate.
C. Corporations can lower their taxable income.
D. A higher income pays a higher percentage in taxes.

Answer 1

A progressive tax means that the richer people will pay a higher percentage of their income in taxes. This prevents extreme wealth accumulation and helps poor people survive- they don't have to pay as much taxes and hence can better afford food and shelter.

The correct answer is:
D. A higher income pays a higher percentage in taxes.