Progressive Income Tax
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A Progressive Income Tax is an income tax in which the tax rate (low tax rate to high tax rate) increases as the taxable base amount increases.
- Example(s):
- Counter-Example(s):
- See: Income Distribution, Capitalistic Socialism.
References
2013
- http://en.wikipedia.org/wiki/Progressive_tax
- A progressive tax is a tax in which the tax rate increases as the taxable base amount increases.[1][2][3][4][5] The term "progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate.[6][7] 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 relative tax rate or burden increases as an individual's ability to pay it decreases.
The term is frequently applied in reference to personal income taxes, where people with more income pay a higher percentage of that income in tax than do those with less income. It can also apply to adjustment of the tax base by using tax exemptions, tax credits, or selective taxation that creates progressive distribution effects. For example, a sales tax on luxury goods or the exemption of basic necessities may be described as having progressive effects as it increases a tax burden on high end consumption or decreases a tax burden on low end consumption respectively.[8][9][10]
- A progressive tax is a tax in which the tax rate increases as the taxable base amount increases.[1][2][3][4][5] The term "progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate.[6][7] 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 relative tax rate or burden increases as an individual's ability to pay it decreases.
- ↑ Webster (4b): increasing in rate as the base increases (a progressive tax)
- ↑ American Heritage (6). Increasing in rate as the taxable amount increases.
- ↑ Britannica Concise Encyclopedia: Tax levied at a rate that increases as the quantity subject to taxation increases.
- ↑ Princeton University WordNet: (n) progressive tax (any tax in which the rate increases as the amount subject to taxation increases)
- ↑ Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), Concepts of Taxation, Dryden Press: Fort Worth, TX
- ↑ Hyman, David M. (1990) Public Finance: A Contemporary Application of Theory to Policy, 3rd, Dryden Press: Chicago, IL
- ↑ James, Simon (1998) A Dictionary of Taxation, Edgar Elgar Publishing Limited: Northampton, MA
- ↑ Internal Revenue Service: The luxury tax is a progressive tax – it takes more from the wealthy than from the poor.
- ↑ Luxury tax – Britannica Online Encyclopedia: Excise levy on goods or services considered to be luxuries rather than necessities. Modern examples are taxes on jewelry and perfume. Luxury taxes may be levied with the intent of taxing the rich...
- ↑ Clothing Exemptions and Sales Tax Regressivity, By Jeffrey M. Schaefer, The American Economic Review, Vol. 59, No. 4, Part 1 (Sep., 1969), pp. 596–599