Question

What characterizes a degressive tax system?

• A. Tax rate is constant regardless of income
• B. Tax rate decreases as income increases
• C. Tax rate increases with income up to a certain limit, then becomes constant
• D. Tax rate randomly fluctuates

Answer 1

Answer:

C. Tax rate increases with income up to a certain limit, then becomes constant

• A degressive tax system is a mix of progressive and proportional taxes; initially, tax rates rise with income up to a threshold, beyond which a fixed rate is applied uniformly.