Progressive Taxation refers to which concept?

• A. Taxation that applies the same rate to all income
• B. Taxation that taxes only consumption
• C. Taxation in which higher-income brackets are taxed at higher rates
• D. Taxation that exempts all low-income earners

Answer: (C)

Progressive taxation means the tax rate rises as income rises, so higher-income earners pay higher rates on the portions of their income that fall into higher brackets. This often uses marginal rates, where only income within a given bracket is taxed at that bracket’s rate, leading to a higher overall share of income paid by those with greater ability to pay. That’s why the correct description is that higher-income brackets are taxed at higher rates.

Other options describe different systems: a single flat rate would tax everyone the same percentage; a tax on consumption taxes spending rather than income; and exempting all low-income earners describes a policy outcome not inherent to the concept of progressivity.