Which type of taxes aims to reduce the tax incidence on people with smaller incomes?

The correct choice focuses on progressive taxes, which are designed to impose a higher tax rate on higher income levels while reducing the tax burden on individuals with lower incomes. This system aims to ensure that those who can afford to pay more contribute a greater share to government revenues, thereby alleviating the financial strain on lower-income earners. The underlying principle of progressive taxation is based on the ability to pay; as individuals earn more, they contribute a larger percentage of their income to taxes, enhancing equity in the tax system.

In contrast, regressive taxes impose a heavier burden on those with lower incomes, as they take a larger percentage of income from low-income individuals compared to high-income earners. Flat taxes apply the same rate regardless of income level, failing to account for differing abilities to pay, and nominal taxes refer to the stated rate without adjustment for income levels or economic conditions. Understanding these different tax structures highlights why progressive taxes are aimed specifically at reducing the tax burden on those with smaller incomes.