Which tax system applies the same tax rate to all taxpayers, regardless of income?

• A. Progressive tax
• B. Proportional tax
• C. Regressive tax
• D. Inflation rate

Answer: (B)

The main idea is how tax rates relate to income. A proportional tax charges the same percentage of income from everyone, so high earners and low earners pay the same rate. For example, if the rate is 12%, both a person earning $30,000 and one earning $300,000 would pay 12% of their income. In contrast, a progressive tax raises the rate as income rises, and a regressive tax takes a larger share from lower-income groups. An inflation rate isn’t a tax system at all. So the system that applies the same rate to all is the proportional tax.