Loopholes in the progressive tax system mean the_______.

Loopholes in the progressive tax system mean the_______.

a. rich pay far less in taxes than the official tax rate suggests

b. middle-class is able to direct their taxes to specific programs

c. lower-class do not have to pay taxes

d. government accounts for the discrepancy in the wage gap

Answer: a. rich pay far less in taxes than the official tax rate suggests

Tax loopholes under the progressive system are numerous options such as loopholes, exemptions, and deductions that are legally sustainable and are b used by the wealthy and the corporations to pay tax rates that far less than the normal rates demanded. In fact, while progressive is the attribute of the tax system with its rates rising as income rises, wealthy people can lock their tax-payable amounts down with a number of means.

On a more specific note, the sources of such loopholes can be traced to various avenues such as tax deductions for business expenses, tax-credit, offshore accounts, complex financial structures and utilizing tax law grey areas. This leads to a situation where the rate of tax paid by the rich is way lower than the rate spelled out in the law and that causes fairsness and equity concerns in the tax system.