Mr. Patrick’s income is N900 while that of Mr. Shodawe is N1,300. if Mr. Patrick and Shodawe pay N90 and N130 as taxes, the tax system is

Answer Details

The tax system described is progressive. A progressive tax system is one in which the tax rate increases as income increases. This means that people with higher incomes pay a larger percentage of their income in taxes than people with lower incomes. In the example provided, Mr. Patrick earns less than Mr. Shodawe but pays a smaller amount of tax (N90 vs N130). This implies that the tax rate for Mr. Patrick is lower than that of Mr. Shodawe. The progressive tax system is designed to redistribute wealth by taking more from those who can afford to pay more and using the revenue to provide social services and support for those who are less fortunate. It is based on the principle of ability to pay, which means that those who have more should contribute more to support the needs of society. Overall, the progressive tax system is considered to be fairer than other tax systems because it places a greater burden on those who are better off. It helps to reduce income inequality and ensure that everyone contributes to the common good according to their means.