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Which of the following is the characteristic of progressive tax?
(1) Marginal tax rate should be increasing.
(2) Marginal tax rates should be more than average tax rate.
Select the correct answer using the code given below :
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- 1 only
- 2 only
- Both 1 and 2 only
- Neither 1 nor 2
Correct Option: C
A progressive tax is a tax in which the tax rate increases as the taxable base amount increases. Regarding progressing tax, marginal tax rate should be increasing and it should be more than average tax rate.
