Question

You might think it would be more fair to ask each person to pay a certain pecentage of what they earn as tax. Supposing everyone paid 10% in taxes, calculate how much each person would pay?

Person	Earning per month (in Rupees)	Tax as fixed amount per month (in Rupees)
Jyoti	1500
Asif	8000
Nithesh	30,000

Would this be fair? Still Jyoti may not have enough to live. Asif may not have enough for repairing of his house. But Nithesh would have plenty of money for all basic necessities even if he had to pay 20% of his income as taxes.

Answer 1

• Tax rate is same for all people i.e. 10%. 
• So Jyothi has to pay 10% of 1500 i.e., Rs. 150/- 
• Asif has to pay 10% of 8000 i.e., Rs. 800/- 
• Nithesh has to pay 10% of 30000 i.e., Rs. 3000/- This is not fair. 

This is against the progressive taxation which insists that the rate of tax has to be increased when income increases. Hence charging 20% of tax on Nithesh is quite fair.