With reference to methods of taxation, consider the following statements: 1. Progressive taxation is considered pro-poor, as it imposes higher tax rates on higher income levels, typically through income slabs. 2. Regressive taxation imposes decreasing tax rates as the value or volume increases, which can end up burdening the poor more than the rich. 3. Proportional taxation applies a uniform tax rate regardless of income or production level and is widely adopted as the primary taxation method in modern democracies. Which of the statements given above is/are correct? |ForumIAS

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: A

Notes:

Explanation:

Progressive taxation uses increasing tax rates for higher income levels. It aligns with the idea of taxing people based on affordability and is widely seen as equitable.
In regressive taxation, the more you produce or earn, the lower the tax rate — this can place a greater burden on low-income individuals or small producers.
While proportional taxes apply a uniform rate, they are generally not used independently. Instead, they serve as a complementary method to cap extremes of progressive or regressive taxation. It is not the most popular or primary method in modern democracies.

Source- TMH Indian Economy by Ramesh Singh

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