Which tax takes a larger share of income as income rises?

• A. Proportional tax
• B. Flat tax
• C. Progressive tax
• D. Regressive tax

Answer: (C)

Progressive taxation means the tax rate rises as income rises, so the portion of income paid in taxes grows as earnings increase. As people move into higher tax brackets, their average tax rate climbs, increasing the share of their income that goes to taxes. For example, someone earning $20,000 might pay a smaller percentage of their income in taxes than someone earning $100,000, who faces higher rates on a larger portion of their income. In contrast, a proportional (flat) tax charges the same rate on all income, keeping the share constant, and a regressive tax takes a larger share from lower-income earners, not from higher ones. So the tax that takes a larger share of income as income rises is the progressive tax.