Question

Rose earns 100,000 a year, and Jack earns50,000 a year. They each pay a certain amount of tax on their income. Which type of tax is based on a fixed percentage of income?

1) Income Tax
2) Sales Tax
3) Property Tax
4) Excise Tax

Answer 1

A proportional tax is one that is based on a fixed percentage of income. In practice, U.S. income tax is usually progressive, meaning the tax rate increases with income.

Sales, property, and excise taxes are based on transaction value, property value, and specific goods, respectively.

Step-by-step explanation:

The type of tax that is based on a fixed percentage of income is known as a proportional tax, also sometimes referred to as a flat tax.

In the context of Rose and Jack's earnings, the proportional tax implies that both would pay the same tax rate on their income regardless of the amount they earn. This is in contrast to a progressive tax, where the tax rate increases as income increases.

Income tax can be structured as a proportional tax, but in practice, in the United States, it is typically a progressive tax. Sales tax, property tax, and excise tax are not based on a fixed percentage of income;

sales tax is based on sales transactions, property tax is based on property value, and excise tax is levied on specific goods.

The type of tax that is based on a fixed percentage of income is Income Tax. Income tax is a form of proportional tax, where the tax rate remains the same regardless of the level of income.

In the given scenario, both Rose and Jack would pay a certain percentage of their income as tax, based on their respective earnings.