Proportional taxes

Proportional, Progressive, Regressive and Digressive taxes:

Direct taxes can also be categorized on the basis of the degree of permissiveness or distribution of their burden on tax payers. Capability of the people to pay a tax is evaluated on the basis of income, property, size of the family and consumption and so on. The capability to pay in practice entails tax base and rate. Tax base represents the income, property and expenses on the basis of which capability to pay the tax are computed. Rate structure points out equalization of burden of taxation. Tax rate is the percentage of tax levy per unit of tax base. The net amount of tax is equivalent to the tax base multiplied by the tax rate.

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