Progressive tax system

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Progressive tax system

A tax system that taxes the wealthy at a higher percentage rate than the less wealthy.

Progressive Tax System

A system of taxation in which persons or corporations are assessed at a greater percentage of their income according to the theoretical ability to pay. That is, taxpayers pay more in taxes if they earn more in income. For example, taxpayers may pay 25% of their income in taxes up to a certain amount, and 35% of everything earned over that amount.

A theory behind progressive taxation states that persons or corporations who earn the same or a similar amount of money should be taxed in the same or a similar way. For example, the theory states that two individuals making $50,000 per year should be taxed the same amount, regardless of how they earned their income. This is known as horizontal equity. While most countries have some form of progressive taxation, it is usually coupled with other taxes, such as a sales tax, and few countries treat all income as exactly the same. See also: Regressive tax system.
References in periodicals archive ?
The seriousness of the region's political leaders should be gauged according to two criteria: their readiness to push for robust and progressive tax systems and their sincerity about introducing checks and balances and promoting judicial independence.
From the south to the north, PSI affiliate unions are working together across borders to end tax havens, tax avoidance and corruption, and to bring in progressive tax systems that are properly resourced and enforced.
Ireland has one of the most progressive tax systems in the OECD now.
States with progressive tax systems, which include an income tax, would see the most significant revenue change since it is in the income tax where compliance will increase under reform; unauthorized immigrants currently pay approximately the same level of sales and property taxes as other U.
The most developed countries in the world, like the United States, Germany, Finland, Japan, all have progressive tax systems.
Simplifying, while one group believes this is a good choice, as it shares prosperity and reduces social inequality, another believes a progressive tax system would result in people and firms paying more taxes.
In their view, besides simplicity, any tax system must balance the competing interests of progress and justice, which the authors term "the economic cost of progressive tax systems.

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