progressive tax


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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 ?
One research study on state tax code progressivity found that states with more progressive tax codes spend more money on programs for poor people (Reschovsky, 1998); another study found that children in "high-tax" states--that is, states that take in more revenue in taxes than "low-tax" states--have better social welfare outcomes (Petit, 2006).
If we are to get a more progressive tax system I would like to see it smoothed out.
In the last weeks, one question has been broadly discussed in Latvia: is a progressive tax regime good for Latvia?
The Coalition's idea of exempting the lowest paid from income tax is not only long overdue but a most welcome step towards creating a more progressive tax system.
The reformers have a mountain of evidence to justify a shift to more progressive tax structures.
The CVT has been doubled from two percent to four percent, and within 90 days of the NFC Award, the CVT would automatically be converted into tax on Real Estate gains, which would be a progressive tax.
A progressive tax system means that those with higher incomes pay a higher proportion of their income in taxes.
Among the 15 papers are discussions of the choice between a flat tax on labor income or a progressive tax on capital income, the Nordic dual model of capital income taxation as experienced in Sweden over 15 years, and the consequences of demographics and globalization for the Finnish tax system.
We are entering a new era and the UK needs a progressive tax system which ensures that the greatest burden falls on the widest shoulders.
The debate did offer, once again, a useful crystallization of the two candidates' different approaches on tax policy and government spending, with McCain reiterating his commitment to low taxes and Obama describing a more progressive tax code and outlining the need to find revenue to make "investments.
The tax facility is against the existing tax system adopted by the country that uses progressive tax rate set based on income.

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