What term describes a tax system in which the wealthy pay a higher percentage of their income than the middle class?

• A. Progressive taxation
• B. Flat taxation
• C. Regressive taxation
• D. Payroll tax

Answer: (A)

Progressive taxation describes a tax system where higher incomes are taxed at higher rates. In this setup, as people earn more, the portion of their income paid in taxes increases, typically through a sequence of brackets where each higher bracket applies to a larger slice of income. The purpose is to tie tax burden to the ability to pay and to reduce after-tax inequality, since wealthier individuals contribute a larger share of their income. By contrast, a flat tax would apply the same percentage to everyone, a regressive tax would take a larger share from lower-income earners, and a payroll tax is a specific wage-based levy focused on funding social programs, not a broad income tax structure.