PRC-3 · Chapter 16 · Question 6 of 20
The government enforces a tax system where a person earning Rs. 50,000 pays 5%, but a person earning Rs. 1 million pays 35%. This system, designed to reduce wealth inequality, is a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Progressive tax
Explanation
A progressive tax imposes a higher percentage rate on higher-income earners, taking a larger fraction of their wealth compared to lower-income earners.
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