Perhaps if taxation was done on the basis of possibly achieved income, the discussions on the selection of progressive taxes -
proportional taxes would be less fervent and the fiscal equity requirement would be easier to accomplish.
This tax is a
proportional tax, but it becomes a regressive tax once the upper limit is reached.
In making this argument, Trostel uses an econometric model with a
proportional tax rate, and it is assumed that the direct costs of obtaining higher education are not tax-deductible.
Thus, John Stuart Mill's formula of the "ability to pay" doctrine in the 19th century calls for a
proportional tax on income above subsistence (see Musgrave 1985, p.
The income tax function consists of two parts, a progressive income tax and
proportional tax on income.
Income from capital is subject to a
proportional tax of 30 percent.
The elimination of the
proportional tax break would generate 3.3 trillion yen a year.
The government's tax panel started talks Tuesday on tax reform for fiscal 2005, focusing on reviewing
proportional tax cuts introduced in 1999 in a bid to restore the nation's dwindling finances.
Nor does it follow that just any arbitrary magnitude of the
proportional tax is justified.
Each consumer faces the full-income budget constraint wT + N = C + wl, with w = w(1 - t) where w is the fixed gross wage, t is a
proportional tax rate on labor income, T is the total time endowment, and N is non-labor income.