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CSS Audit Tax Finance P-II QUESTION #1220
Question 1
A progressive tax system is one where:
  • Marginal tax rates are high
  • Higher income taxpayers pay more taxes than do lower income taxpayers.
  • Marginal tax rates are low.
  • Higher income taxpayers pay a greater percentage of their income in taxes than do lower income taxpayers.(Correct)
Correct Answer Explanation
A progressive tax system is one where the tax rate increases as taxable income increases — higher earners pay a larger percentage (not just a larger amount) of their income in taxes. Option (B) is also partially true but less precise; any tax (even flat) means higher earners pay more in absolute terms. Option (D) is the precise definition of a progressive system.