Which of the following is a classification of taxes based on their impact on income distribution?
A. Only direct and indirect
B. Only central and state
C. Progressive, proportional and regressive
D. Only ad valorem and specific
Answer: Option C
Solution (By JKSSB Mock Tests)
Taxes are classified as progressive (rate rises with income), proportional (constant rate) or regressive (rate falls with income) according to their effect on income distribution.
Explanation:
Ad valorem is a classification based on the method of assessment (percentage of value). Based on impact on distribution, taxes are progressive, proportional or regressive.
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