📚 Topic Summary
Tax structures are the different ways governments collect money from individuals and businesses. Understanding how these structures work – progressive, regressive, and proportional taxes – is key to understanding how wealth is distributed and the fairness (or equity) of a tax system. Progressive taxes take a larger percentage of income from high-income earners, regressive taxes take a larger percentage from low-income earners, and proportional taxes take the same percentage from everyone.
🗂️ Part A: Vocabulary
Match the term to its correct definition:
| Term |
Definition |
| 1. Progressive Tax |
A. Tax that takes a larger percentage of income from low-income earners. |
| 2. Regressive Tax |
B. The fairness of a tax system, considering its impact on different income groups. |
| 3. Proportional Tax |
C. Tax that takes the same percentage of income from all income earners. |
| 4. Tax Incidence |
D. Tax that takes a larger percentage of income from high-income earners. |
| 5. Tax Equity |
E. The actual division of the burden of a tax between buyers and sellers. |
(Answers: 1-D, 2-A, 3-C, 4-E, 5-B)
✍️ Part B: Fill in the Blanks
A _________________ tax system is one where higher earners pay a larger percentage of their income in taxes than lower earners. Sales taxes are often considered ________________ because lower-income individuals spend a larger portion of their income on taxable goods. A flat tax, where everyone pays the same percentage, is an example of a _________________ tax.
(Answers: progressive, regressive, proportional)
🤔 Part C: Critical Thinking
Imagine your country is considering implementing a national sales tax on all goods and services. Discuss the potential benefits and drawbacks of this policy, focusing on its impact on different income groups and overall tax equity.