When taxable income on a progressive basis exceeds certain thresholds
A)a higher rate of tax is charged on all income.
B)tax credits become more important.
C)deductions reach a maximum allowable amount.
D)the tax rate is increased on the next dollars of income until a new income level is reached.

Question

Quizplus · Accepted Answer

When taxable income on a progressive basis exceeds certain thresholds, the tax rate is increased on the next dollars of income until a new income level is reached. This means that a person will pay a higher rate of tax on the portion of their income that exceeds the threshold, but not on their entire income. This is how progressive taxation works, with higher rates charged on higher levels of income.

When Taxable Income on a Progressive Basis Exceeds Certain Thresholds