Question

1
select the correct answer.
how does the rate of a proportional tax change with income?
a. the rate increases as income increases.
b. the rate remains the same, even if income increases or decreases.
c. the rate decreases as income increases.
d. the rate decreases as income decreases.

Explanation:

A proportional tax is defined as a tax where the tax rate remains constant regardless of the level of income (whether income increases or decreases). Option A describes a progressive tax (rate increases with income), Option C describes a regressive tax (rate decreases with income), and Option D has an incorrect relationship (a proportional tax rate doesn't decrease as income decreases; it stays the same). So the correct description of a proportional tax rate's relationship with income is that it remains the same.

Answer:

B. The rate remains the same, even if income increases or decreases.