Chapter 16, Problem 19AA

To determine

To ascertain the indentifying the three forms of taxation and explaining hoe its works.

Explanation of Solution

Taxes are classified as regressive, progressive, or proportional, it matters on whether the tax as a percentage of income declines, increases or remains the exact as income increases. Some of the taxations forms are explain in the table given below.

Forms of taxation	How it works
Proportional Tax	A proportional tax, also known as a flat tax, has a fairly similar impact on small-, middle-, and high-income earners. The same tax rate pay by them, whatever their income is. A progressive tax has more of a financial effect on those with higher incomes than on those with minimum earnings.
Progressive Tax	A progressive tax incorporates a higher degree of taxation, based under the premise that high-income taxpayers can afford to pay more.
Regressive Tax	A regressive tax levies the same amount on items or commodities bought irrespective of the purchaser 's income and on low earners is thought to be particularly difficult.

Economics Concept Introduction

Introduction: Governments levy charges on their residents and companies as a way to collect taxes, which are then used to meet their budgetary demands. It involves financing government and public programs, and making the country's market climate conducive to economic development.