Final answer:
The different tax treatments associated with each type of income are proportional tax, progressive tax, and regressive tax.
Step-by-step explanation:
The different types of tax treatments associated with each type of income are:
- Proportional Tax: A proportional tax is imposed at a constant rate, regardless of the individual's income. For example, if the tax rate is 10%, then someone with a higher income would pay a higher amount of tax compared to someone with a lower income.
- Progressive Tax: A progressive tax is imposed at increasing rates as the individual's income increases. In other words, the percentage of tax paid increases with higher incomes. This is represented by the lines in the figure showing the tax paid increasing and becoming steeper at higher income levels.
- Regressive Tax: A regressive tax is imposed at decreasing rates as the individual's income increases. This means that lower-income individuals pay a higher percentage of their income in taxes compared to higher-income individuals. An example of a regressive tax is a sales tax.