Question

A progressive tax structure is one in which:

A. Tax rate increases as income increases
B. Tax rate decreases as income increases
C. Flat tax rate regardless of income
D. Tax rate is unrelated to income

Answer 1

A progressive tax structure is one in which the tax rate increases as income increases, meaning higher-income earners pay a higher percentage of their income in taxes.

Step-by-step explanation:

A progressive tax structure is characterized by a system in which the tax rate increases as income increases. This means as individuals earn more money, they are subjected to higher marginal tax rates on their income. For instance, someone earning between $50,000 and $80,000 might be taxed at a 20% rate, while another earning between $300,000 and $1,000,000 might be taxed at a 35% rate. In a progressive tax system, the wealthy pay a higher percentage of their income in taxes compared to those with lower incomes, reflecting a principle of tax fairness and ability to pay.