Which type of tax system can benefit lower-income earners?

A progressive tax rate system benefits lower-income earners because it imposes higher tax rates on higher levels of income, while lower-income individuals pay a lower percentage of their income in taxes. This structure helps to reduce income inequality by ensuring that those who can afford to contribute more financially to the system do so, leading to potential redistributive effects that can support social welfare programs and services. As a result, lower-income earners retain more of their income, which can be used for essential needs such as housing, food, and healthcare.

This system contrasts with proportional or flat tax rates, where everyone pays the same percentage regardless of income level, potentially placing a heavier financial burden on lower-income individuals compared to wealthier individuals who may not feel the same impact of the tax on their overall economic status. Thus, the progressive tax system is designed to create a fairer tax structure that takes into account the ability to pay.