In a proportional tax system, how does taxation differ between income levels?

In a proportional tax system, all households are taxed at the same percentage of their income, regardless of how much they earn. This means that if someone earns a low income and another individual earns a high income, both would pay the same tax rate on their respective incomes. For example, if the tax rate is set at 15%, a person earning $30,000 would pay $4,500 in taxes, while someone earning $300,000 would pay $45,000, but both individuals pay the same rate of 15%. This characteristic makes the system simple and straightforward, as everyone is treated equally in terms of the percentage of income that is taxed.

In contrast, higher income households paying a higher percentage would be indicative of a progressive tax system, where tax rates increase as income rises. Lower income households paying a higher percentage would imply a regressive tax system, which disproportionately affects those with lower incomes. A variable taxation system based on individual circumstances would refer to a situation where tax rates could differ based on factors other than income level, which is not characteristic of a proportional tax system.