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

Question

Quizplus · Accepted Answer

When taxable income on a progressive basis exceeds certain levels, the tax rate is increased until a new income level is exceeded. This is the basic principle of progressive taxation, where those who earn more pay a higher rate of tax. The tax rate is increased in steps as income increases, with each step referred to as a tax bracket. Once the income reaches the next tax bracket, a higher rate of tax is imposed.

When Taxable Income on a Progressive Basis Exceeds Certain Levels