Progressive tax with exemption threshold

Steps:

• Calculate tax for income $10,000:$0 tax, effective rate 0%.
• Calculate tax for income $30,000:$2,000 tax on $10,000 excess, effective rate 6.67%.
• Calculate tax for income $100,000:$16,000 tax on $80,000 excess, effective rate 16%.
• Observe effective rate rises with income, indicating progressivity.

Why A is correct:

• Progressive tax defined as average tax rate increasing with income; here, exemption creates 0% rate below $20,000, rising toward 20% above.

Why the others are wrong:

• B: Not proportional overall, as rate applies only to excess over $20,000, not entire income above threshold.
• C: Similar to B; proportional implies flat rate on all qualifying income, but exemption makes it uneven.
• D: Regressive requires decreasing average rate with income; here, rate increases.

Final answer: A