A government collects the same percentage of income as tax from all workers regardless of how much they earn. What type of tax system is this?
Question 1 Report
A government collects the same percentage of income as tax from all workers regardless of how much they earn. What type of tax system is this?
Answer Details
The correct answer is Proportional.
A proportional tax takes the same percentage of income from all taxpayers regardless of how much they earn. If every worker pays, for example, 20% of their income in tax, the system is proportional.
A progressive tax takes a higher percentage from higher earners. A regressive tax takes a higher percentage from lower earners. "Indirect" refers to taxes levied on goods and services rather than on income, so it describes the method of collection, not the rate structure.
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