Q: What happens to the percentage of an income that is taxed when income rises and the tax is a proportional one?
A. The percentage of tax falls.
B. The percentage of tax rises.
C. The

percentage rises and then falls.
D. The percentage of tax stays the same.

A: In the given scenario, income and tax are proportional to each, therefore, if generated income rises that tax rises as well but therefore net income after tax decreases. For instance, Year 1 generated income is 10,000 and tax charges is 20%, and on year 2 generated income is 20,000 and tax charge is 40%. Income after tax for Year 1 is 8,000 and for year 12,000. Hence, proportional increases in

income and tax will cause the net income after tax to decrease.

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