Tax System
The tax system is classified into Proportional, Progressive, and Regressive Taxes.
Proportional Tax: A type of tax in which everyone pays the exact same percentage, irrespective of their earnings. Lower-income, middle-income, and high-income earners all owe the same percentage of tax.
Progressive Tax: A type of tax based on the individual’s ability to pay. It has a lower rate for low-income earners and a higher rate for high-income earners. High-income earners pay more taxes as their income increases.
Regressive Tax: A type of tax where low-income earners pay a higher percentage of their income compared to high-income earners, creating a smaller burden on the rich and a greater burden on the poor.