American Institute of Certified Planners (AICP) Practice Exam

Which of the following is NOT considered a type of tax?

1. Progressive Tax

2. Proportional Tax

3. Regressive Tax

4. Personal Tax

The correct answer is: Personal Tax

The concept of taxation includes various structures that dictate how tax burdens are distributed among individuals or entities. Progressive tax, proportional tax, and regressive tax are all forms of tax based on different principles of income distribution and taxation. A progressive tax system imposes higher tax rates on higher income levels, thus individuals with higher incomes pay a larger percentage of their income in taxes. Proportional tax, often referred to as a flat tax, charges the same percentage regardless of income level, so everyone pays the same proportion of their income. Regressive tax, on the other hand, takes a larger percentage from lower-income earners than from higher-income earners, often found in sales taxes or certain fees. Although "personal tax" is a term that can be used to describe taxes imposed on individuals, it is not typically classified in the same way as the other three types listed. Instead, personal tax might refer broadly to any tax that individuals are responsible for, but it does not represent a distinct method of taxation defined by its rate structure relative to income levels. Therefore, it does not fit into the framework of distinct tax categorizations commonly used in economic discussions.