Question 39
Public FinanceThe best technical description of a progressive tax is a
- A.tax which takes more money from the rich than from the poor
- B.more equitable tax than a regressive one
- C.tax which takes a higher proportion of extra naira received as income rises
- D.tax which falls directly on those in the high income brackets.
Show the answer and explanation
Answer: C (tax which takes a higher proportion of extra naira received as income rises)
Explanation
With a progressive tax the rate rises as income rises, so a larger share of each extra naira is taken at higher incomes.