Question

Which of the following tax rate systems is applicable to the U.S. individual income tax?

a. Proportional tax rate system.
b. Regressive tax rate system.
c. Progressive tax rate system.
d. None of the above.

Answer 1

The U.S. individual income tax system is a progressive tax rate system where tax rates increase with higher income levels, designed to place a greater tax burden on individuals with higher incomes compared to those with lower incomes.

Step-by-step explanation:

The United States individual income tax system is a progressive tax rate system. This means that the rate of taxation increases as an individual's income increases. For example, a person earning a lower income will pay a smaller percentage of their income in taxes, whereas a person with a higher income will pay taxes at a higher rate. As of 2023, there were seven tax rates for individual income: 10%, 12%, 22%, 24%, 32%, 35%, and 37%, with each rate applicable to different income brackets depending on filing status, such as single or married. The progressive nature of the tax rate system is designed to ensure that those who have the ability to pay more do so, contributing a larger share of their income than those with less income.