When the tax rate increases as the taxable amount increases, the tax is a:
A)Proportional tax
B)Progressive tax
C)Regressive tax
D)Capital gains tax

Question

Quizplus · Accepted Answer

A progressive tax rate increases in accordance with the value of the taxed amount. The U.S. income tax is considered a progressive tax because people who earn more pay a higher tax rate than those who earn less. A proportional tax is a "flat tax," which requires everyone to pay the same rate regardless of income level. A regressive tax is one in which the rate decreases as the taxable amount increases. A capital gains tax is paid on the profit one earns from an investment like stock or real estate.

When the Tax Rate Increases as the Taxable Amount Increases