If a Tax Is Levied as a Proportional Tax, It

question 50

True/False

If a tax is levied as a proportional tax, it cannot be regressive in its actual effect.

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Definitions:

Residual Income

The amount of income that an entity has after all costs and expenses, including the cost of capital, have been deducted.

Return On Investment

A measure of the profitability of an investment, calculated by dividing the gain from the investment by the cost of the investment.

Combined Margin

A metric that combines multiple types of profit margins (such as gross, operating, or net margin) to assess overall performance.

Contribution Margin Ratio

The percentage of sales revenue remaining after variable costs are deducted, indicating how much contributes to fixed costs and profit.