Final answer:
Taxation that allows lower-income people to pay lower rates than higher-income people is called progressive taxation, which increases the tax rate for individuals as their income increases.
Step-by-step explanation:
The type of taxation system that allows lower-income people to pay lower rates than higher-income people is known as progressive taxation. In this system, the rate of taxation increases as an individual's income increases. For example, someone earning $50,000 might be taxed at a 20 percent rate, while another individual with an income of $300,000 might be taxed at a 35 percent rate. This is to ensure that those who have the ability to pay more do so, and it reduces the tax burden on those with lower incomes. Proportional taxation, on the other hand, involves a flat tax rate regardless of income level. A regressive tax is where higher-income earners pay a smaller proportion of their income in tax compared to lower-income earners, which can be more burdensome for those with lesser means.