Question

A progressive tax is such that

1. tax rates are higher the greater one's income.

2. the same tax rate applies to all income receivers, so that the rich pay absolutely more taxes than the poor.

3. entrepreneurial income is exempt from taxation.

4. the revenues it yields are spent on transfer payments.

Answer 1

Answer:

1. True. The tax rates are higher, the greater one's income

Explanation:

1. True. Progressive tax is defined as a tax whose rate increases as the payer's disposable income increases. The implication is that ,individuals who earn high incomes have a greater proportion of their incomes taken to pay  tax.

A perfect example of progressive tax is income tax  whose rate is tied directly to personal income income.

2. False. The rate increases as the disposable income of the tax payer increases under progressive tax

3.False. Entrepreneurial income will be taxed after adjusting for allowobale and non-allowable income and expenses and relevant loss relief.

4. False. The revenue realised from progressive taxes are utilized by the government as stipulated in the budget.