Progressive system of taxation

The progressive system of taxation places importance on direct rather than indirect taxes, on non-essentiality rather than essentiality to the taxpayer of the object of taxation, or on the taxpayer’s ability to pay. An example is that individual income tax system that imposes rates progressing upwards as the tax base (taxpayer's taxable income) increases.

A progressive tax, however, must not be confused with a progressive system of taxation.

What Is a Progressive Tax? A progressive tax is a tax that imposes a lower tax rate on low-income earners compared to those with a higher income, making it based on the taxpayer's ability to pay. That means it takes a larger percentage from high-income earners than it does from low-income individuals. A progressive tax is one that charges a higher tax rate for people who earn a higher income. The rationale is that people with a lower income will usually spend a greater percentage of their income to maintain their standard of living. Those who are richer can typically afford the basic necessities in life (and then some). (Progressive Tax Definition. REVIEWED BY JULIA KAGAN. Updated Jun 29, 2019.

A progressive tax is a tax in which the tax rate increases as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate. The term can be applied to individual taxes or to a tax system as a whole; a year, multi-year, or lifetime. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability to pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay. The opposite of a progressive tax is a regressive tax, where the average tax rate or burden decreases as an individual's ability to pay increases. (Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), Concepts of Taxation, Dryden Press: Fort Worth, TX, cited in Progressive tax. From Wikipedia, the free encyclopedia.

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