progressive tax

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Related to Progressive income tax: Graduated income tax

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.

progressive tax

A tax with a rate that increases as the amount to be taxed increases. For example, a taxing authority might levy a tax of 10% on the first $10,000 of income and increase the rate by 5% per each $10,000 increment up to a maximum of 50% on all income over $80,000. A progressive tax often uses high rates on relatively large incomes and tends to encourage tax shelters. The federal income tax, many state income taxes, and the unified gift-estate tax are progressive taxes. Compare regressive tax.

Progressive tax.

In a progressive, or graduated, income tax system, taxpayers with higher incomes are taxed at higher rates that those with lower incomes.

Those in favor of this approach say that the greatest tax burden falls on those who can afford to carry it. Opponents argue that it imposes an unfair burden on the people whose ingenuity and hard work make the economy strong.

progressive tax

A tax that imposes a greater burden on the wealthy than on those with low incomes because the tax rate percentage increases as one's income or assets increase.Income taxes and estate taxes are progressive taxes.Contrast with a regressive tax,such as sales tax,that charges the same percentage to all taxpayers but results in a heavier burden to low-income citizens.

References in periodicals archive ?
THE FLAW IN virtually all of the intellectual arguments on the issue a of the progressive income tax (both pro and con), is a lack of appreciation for how income is determined.
The driving force that makes the typical family better off under the lifetime income tax than it would be under a traditional progressive income tax regime is that such family "transfers" some borrowing to the government and thus realizes savings in interest expense, even after taking into account that such family will on average be required to pay off (with interest) the borrowing "transferred" to the government.
The formula for the average progressive income tax rate, [Tau], is [Tau] = [Alpha] + [Beta] (B/2), where B is the income tax base.
The change from the current progressive income tax system to a broad-based consumption tax would shift the tax burden from high-income families to middle- and low-income families," said Samuels.
A VAT could be combined with a progressive income tax on the very wealthy.
Property owners and the upper classes often successfully oppose a progressive income tax or sizeable property tax, introduce tax loopholes beneficial to them, or evade tax payment without penalty.
Adam Smith, in his 1776 Wealth of Nations, propounded a progressive income tax.
Fifth, the purpose of the assignment of income doctrine is to protect the integrity of the progressive income tax structure in situations in which the transferor essentially retains control over transferred property.
The mortgage interest deduction primarily helps middle class home owners and is consistent with the principles of a progressive income tax.
If it wins the election, the Bulgarian Socialist Party, BSP, will abolish the flat tax and reverse to a progressive income tax.
Raising tax rates for the wealthiest citizens in developing a more progressive income tax framework would bolster this progress.

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