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Proportional taxes take a constant percentage of income, while regressive taxes take a higher percentage as income falls.
Proportional taxes take a constant percentage of income regardless of income level. They do not change as income increases or decreases. In contrast, regressive taxes take a higher percentage of income as income falls, which can have a heavier impact on lower-income earners.
For example, if a sales tax is set at 5% for all income levels, it would be considered a proportional tax. This means that whether someone earns [tex]$10,000 or $[/tex]100,000, they will pay 5% of their income in sales tax. This uniformity can lead to a different impact on individuals based on their income levels.
On the other hand, a regressive tax would take a larger proportion of income from someone earning [tex]$10,000 compared to someone earning $[/tex]100,000, making it more burdensome for lower-income individuals.
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