The table shows the tax paid by a worker at different income levels. Income ($) Tax paid ($) Tax rate (%) 10 000 1000 10 20 000 3000 15 40 000 8000 20 What ...
Question 1 Report
The table shows the tax paid by a worker at different income levels.
| Income ($) | Tax paid ($) | Tax rate (%) |
|---|---|---|
| 10 000 | 1000 | 10 |
| 20 000 | 3000 | 15 |
| 40 000 | 8000 | 20 |
Answer Details
The correct answer is Progressive.
A progressive tax system is one in which the tax rate increases as income rises. From the table:
- At $10,000 income: tax rate is 10%
- At $20,000 income: tax rate is 15%
- At $40,000 income: tax rate is 20%
As the worker earns more, a larger percentage of income is taken in tax. This is the defining characteristic of a progressive tax system, designed to place a greater proportional burden on higher earners.
A proportional tax would charge the same percentage at all income levels. A regressive tax would see the percentage fall as income rises. An indirect tax is a tax on goods and services, not a type of income tax structure.
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