Question

match each tax type with the best example that illustrates it.

regressive tax
proportional tax
progressive tax

• a flat tax on all income, where everyone pays 10% of their income, regardless of how much they earn.
• a federal income tax system where higher earners pay a larger percentage of their income in taxes.
• a state sales tax on most goods, where everyone pays the same percentage, but lower-income individuals spend a larger proportion of their income on these goods.

Explanation:

Define regressive tax

A regressive tax is a tax system where the tax rate decreases as the taxable amount increases. In practice, it takes a larger percentage of income from low-income earners than from high-income earners. A classic example is a sales tax, because lower-income individuals must spend a larger proportion of their income on basic goods.

Define proportional tax

A proportional tax, also known as a flat tax, is a tax system that levies the same percentage of tax on everyone, regardless of their income level. An example is a flat 10% income tax on all earners.

Define progressive tax

A progressive tax is a tax system where the tax rate increases as the taxable amount increases. This means higher-income earners pay a larger percentage of their income in taxes than lower-income earners. A federal income tax with rising brackets is a standard example.

Match types to examples

• Regressive Tax matches with: "A state sales tax on most goods, where everyone pays the same percentage, but lower-income individuals spend a larger proportion of their income on these goods."
• Proportional Tax matches with: "A flat tax on all income, where everyone pays 10% of their income, regardless of how much they earn."
• Progressive Tax matches with: "A federal income tax system where higher earners pay a larger percentage of their income in taxes."

Answer:

Tax Type	Best Example
Proportional Tax	A flat tax on all income, where everyone pays 10% of their income, regardless of how much they earn.
Progressive Tax	A federal income tax system where higher earners pay a larger percentage of their income in taxes.