A System of Taxation in Which Higher-Income Groups Pay a Larger

question 59

Multiple Choice

A system of taxation in which higher-income groups pay a larger percentage of their incomes in taxes than do lower-income groups is called __________.

• A)flat taxation
• B)means-tested taxation
• C)progressive taxation
• D)proportional taxation

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Definitions:

Deadweight Loss

A loss in economic efficiency that can occur when the equilibrium for a good or service is not achieved or is unattainable.

Commodity

A basic good used in commerce that is interchangeable with other goods of the same type.

Tax

a financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund public expenditures.

Tax Avoidance

The legal practice of arranging one's financial affairs to minimize tax liability within the law.