PRC-3 · Chapter 16 · Question 20 of 20
A tax structure states: First Rs. 4,000 earned is tax-free; Rs. 4001-20,000 is taxed at 20%; Above Rs. 20,000 is taxed at 40%. This staggered structure is a classic example of a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Progressive tax
Explanation
Because the marginal tax rate increases as the income bracket increases, it takes a progressively larger chunk from higher earners.
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