If incomes rise by 10% and the government does not lift its tax-free income allowance, individuals will start paying lesser real tax.

Question

Quizplus · Accepted Answer

If incomes rise by 10% and the tax-free income allowance remains unchanged, individuals will effectively pay more in taxes on the additional income that exceeds the allowance, assuming progressive taxation. This does not result in paying less real tax; instead, their overall tax burden as a percentage of their income could increase.

If Incomes Rise by 10% and the Government Does Not