Taxation Flashcards
1
Q
What is a progressive tax system?
A
As income rises a larger percentage of income is paid in tax.
2
Q
What regressive tax system?
A
As income rises a smaller percentage of income is paid in tax.
3
Q
What is proportional tax?
A
The percentage of income paid in tax is constant
4
Q
What are the effects of tax rate change?
A
Incentive to work
Tax revenues
Income distribution
Real output and employment
Average price level
The trade balance
Flows for foreign direct investment
