Question

Assertion (A): A progressive tax takes a larger percentage of income from high income groups.

Reason (R): A regressive tax takes a larger percentage of income from low income groups.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

Explanation:

Both statements accurately describe their respective tax regimes. A progressive tax extracts a bigger percentage from high-income earners, whereas a regressive tax imposes a greater relative burden on low-income individuals. However, because they are separate economic instruments, the definition of a regressive tax does not provide a causal explanation for the progressive tax system.