When the tax structure of a nation is progressive, as real incomes increase, the tax revenues of the government will
A) decline.
B) increase by the same proportion as the increase in real income.
C) increase by a larger proportion than the increase in real income.
D) remain unchanged unless legislative action is undertaken.

Question

Quizplus · Accepted Answer

In a progressive tax system, as real incomes increase, individuals move into higher tax brackets, leading to a larger proportion of their income being taxed, thus increasing tax revenues by a larger proportion than the increase in real income.

When the Tax Structure of a Nation Is Progressive, as Real