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.
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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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

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.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.

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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Empowered with a rough idea of how taxes have burdened economic freedom, it is hoped citizens will be better able to evaluate claims about the alleged greater equity provided by a more progressive income tax structure.
In any event, given the indeterminate nature of the ability-to-pay inquiry, it seems to me that the lifetime income tax is based on as good a measure as any other, and in particular on as good a measure as that embodied in a traditional progressive income tax. For me, the proof in the pudding comes from focusing on two tax periods that are in some ways similar and in some ways not: the third (age 33 through 37) and the eighth (age 58 through 62).
According to Tannenwald, higher-income taxpayers would foot more of the bill under a progressive income tax, while a flat income tax or comprehensive sales tax covering a wide range of goods and services would hit low-income residents particularly hard.
In exchange, the panel will recommend the government soften tax rate ladders under the current progressive income tax system.
They find that even radical modifications, such as raising the value added tax from 18 percent to 25 percent, or substituting a 20 percent flat tax for the current progressive income tax, have only a slight effect on the aftertax distribution of income.
In the United States, government functions are financed by a progressive income tax. The model uses a calibrated progressive income tax function to produce an overall average rate of 19.1 percent and an overall average marginal rate of 26.1 percent.
Watson (Custodial Trust): State and local governments seem to have a considerable investment in the current progressive income tax system.
Treasury Department, told CPAs attending the American Institute of CPAs spring tax division meeting that he believed the United States would retain a progressive income tax, "but it would need to do a much better job in its design."
The Swedish system is characterized by efficiency, parliamentary democracy, and a broad base, with the least progressive income tax rates and a VAT on virtually all goods and services at a fiat rate.
There is a progressive income tax, but, for equivalent levels of income, the Canadians pay one third more than their American counterparts.
A VAT could be combined with a progressive income tax on the very wealthy.
Adam Smith, in his 1776 Wealth of Nations, propounded a progressive income tax. In 1822, David Ricardo seems to have agreed, writing, "Almost all taxes on production fall finally on the consumer." But, by 1871, John Stuart Mill proposed that, "The proper mode of assessing an income tax would be to tax only the part of income devoted to expenditure, exempting that which is saved?" Perhaps the most cogent statements were made by Winston Churchill in 1937 when he stated, "There is no such thing as a good tax," and by Robert P.

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