How are Taxes Levied?

How Are Taxes Levied?

Tax is levied by the government progressively, proportionately as well as regressively.

Progressive tax

Progressive tax rate is one in which the rate of taxation increases (multiplier) as the tax base increases (multiplicand). In the case of a progressive tax, When income increases, the tax rate also increases.

Example

Proportionate taxes

Tax levied on goods and service in a fixed portion is known as proportionate taxes. All tax payers contribute the same proportion of their incomes.

Regressive Taxes

It implies that higher the rate of tax lower the income groups than in the case of higher income groups. It is a very opposite of progressive taxation.