Suppose you live in a country with a proportional tax system. you make $20,000 a year and pay $5,000 in taxes. Your friend makes twice as much money as you. $10,000 is expected to be paid by your friend.
What Is a proportional tax?
An income tax system known as a proportionate tax applies the same percentage of tax to all taxpayers, regardless of their income. For taxpayers with low, moderate, and high incomes, a proportionate tax is the same. Flat taxes are another name for proportional taxes.
Who are the beneficiaries of proportional taxation?
No matter their income, all people are subject to the same tax rate under a proportionate tax system. The idea behind a progressive tax is that higher income individuals can afford to pay a higher percentage of taxes because they can afford to.
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