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 ?
Inadequately progressive tax systems tend to promote profound income inequalities.
Fiserv said that advisors can also model the lifetime tax impact of investment decisions with AdvisorVision's new progressive tax engine, providing greater insight to help clients control the amount or timing of plan contributions, withdrawals, deductions, conversions, gifts and donations.
LM: The NDP explicitly endorses a progressive tax system.
It would also hike taxes on property and income for high income earners by replacing flat taxes on income and property with a progressive tax regime.
Finance Minister Michael Noonan insisted it is a progressive tax.
The progressive tax regime has seen automakers scramble to roll out smaller vehicles into the Turkish market.
According to the report, Hubbard opposed raising tax rates for the rich, but added, "We need a progressive tax system.
The introduction of a new tax structure in January 2004 included a "rent tax" on exports, a progressive tax which increases as crude oil prices rise.
This makes the estate tax a relatively progressive tax source," Maguire said, adding that taxable estates worth more than $10 million accounted for 11.
Altman recommends a more progressive tax rate in the US and ensuring higher rates of college completion.
8220;This company was founded in Wisconsin, and it pains us all to leave, but we feel that the company needs to move to Connecticut to take advantage of the state's progressive tax and building coding laws.

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