An Example of an Ability-To-Pay Principle Tax Is the

question 44

Multiple Choice

An example of an ability-to-pay principle tax is the

• A) gasoline tax.
• B) real estate tax.
• C) sales tax.
• D) license fee for vehicles and drivers.
• E) personal income tax.

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Definitions:

Proportional Tax

A tax system where the tax rate is fixed and applied uniformly to all taxpayers, regardless of income level.

Marginal Tax Rate

The tax rate applied to the next dollar of taxable income, indicating how much tax will be paid on an additional dollar earned.

Average Tax Rate

The fraction of total income that is paid as taxes, calculated by dividing the total amount of tax paid by the total income.

Income

The money received by an individual or group for work, from investments, or from other sources, often used as an indicator of economic standing.