Average tax rates by income groups in France, the United Kingdom, and the United States, 1970 (left) and 2005 (right). Taxes were more progressive in 1970 than in 2005.
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v
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A progressive tax is a tax in which the tax rate increases as the taxable amount increases.[1][2][3][4] 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.[5][6] The term can be applied to individual taxes or to a tax system as a whole. 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, such as a sales tax, where the poor pay a larger proportion[how?] of their income compared to the rich (eg spending on groceries and food staples varies little against income, so poor pay similar to rich even while latter has much higher income)[4]
The term is frequently applied in reference to personal income taxes, in which people with lower income pay a lower percentage of that income in tax than do those with higher income. It can also apply to adjustments of the tax base by using tax exemptions, tax credits, or selective taxation that creates progressive distribution effects. For example, a wealth or property tax,[7] a sales tax on luxury goods, or the exemption of sales taxes on basic necessities, may be described as having progressive effects as it increases the tax burden of higher income families and reduces it on lower income families.[8][9][10]
Progressive taxation is often suggested as a way to mitigate the societal ills associated with higher income inequality,[11] as the tax structure reduces inequality;[12] economists disagree on the tax policy's economic and long-term effects.[13][14][15] One study suggests progressive taxation is positively associated with subjective well-being, while overall tax rates and government spending are not.[16]
^"progressive". Merriam–Webster. "(4b): increasing in rate as the base increases"
^"progressive". American Heritage Dictionary of the English Language (4th ed.). Archived from the original on 9 February 2009. (6). Increasing in rate as the taxable amount increases
^"progressive tax". WordNet. Princeton University. Retrieved 17 February 2023. progressive tax, graduated tax (any tax in which the rate increases as the amount subject to taxation increases)
^ abSommerfeld, Ray M.; Madeo, Silvia A.; Anderson, Kenneth E.; Jackson, Betty R. (1992). Concepts of Taxation. Fort Worth, Texas: Dryden Press.
^Hyman, David M. (1990). Public Finance: A Contemporary Application of Theory to Policy (3rd ed.). Chicago, Illinois: Dryden Press.
^James, Simon (1998). A Dictionary of Taxation. Northampton, Massachusetts: Edgar Elgar.
^Suits, Daniel B. (September 1977). "Measurement of Tax Progressivity". American Economic Review. 67 (4): 747–752. JSTOR 1813408.
^"Internal Revenue Service". Archived from the original on 16 August 2007. Retrieved 27 March 2009. The luxury tax is a progressive tax – it takes more from the wealthy than from the poor.{{cite web}}: CS1 maint: bot: original URL status unknown (link)
^"Luxury tax". Britannica Online Encyclopedia. Archived from the original on 7 July 2012. 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 ...
^Schaefer, Jeffrey M. (September 1969). "Clothing Exemptions and Sales Tax Regressivity". The American Economic Review. 59 (4). Part 1, pp. 596–599. JSTOR 1813222.
^Pickett, Kate; Wilkinson, Richard (26 April 2011). The Spirit Level: Why Greater Equality Makes Societies Stronger. Bloomsbury. ISBN 978-1-60819-341-7.
^Moyes, P. (1988). "A note on minimally progressive taxation and absolute income inequality". Social Choice and Welfare. 5 (2–3): 227–234. doi:10.1007/BF00735763.
^Piketty, Thomas; Saez, Emmanuel (2003). "Income Inequality in the United States, 1913–1998" (PDF). Quarterly Journal of Economics. CXVIII (1st ed.).
^Arnold, Jens (14 October 2008). "Do Tax Structures Affect Aggregate Economic Growth? Empirical Evidence From A Panel of OECD Countries". OECD. Archived from the original on 16 October 2013. Retrieved 2 January 2014.
^Becker, Gary S.; Murphy, Kevin M. (May 2007). "The Upside of Income Inequality". American Enterprise Institute. Archived from the original on January 2, 2014. Retrieved January 8, 2014.
^Oishi, Shigehiro; Schimmack, Ulrich; Diener, Ed (2012). "Progressive Taxation and the Subjective Well-Being of Nations". Psychological Science. 23 (1): 86–92. doi:10.1177/0956797611420882. PMID 22157676. S2CID 8211113.
A progressivetax 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...
proportional tax. Implementations are often progressive due to exemptions, or regressive in case of a maximum taxable amount. There are various tax systems...
Boliviano. The tax is progressive with tax rates in the range of 1.4% to 2.4% and includes both domestic and foreign assets. The tax went into effect...
annual income, but most scale taxes are progressive based on brackets of annual income amounts. Most countries charge a tax on an individual's income as...
higher tax burden. Lower purchasing power of consumers may lead to a failure of some businesses. Lump-sum taxProgressivetax Proportional taxTax incidence...
type of income. The tax rate may increase as taxable income increases (referred to as graduated or progressivetax rates). The tax imposed on companies...
The Suits index of a public policy is a measure of taxprogressiveness, named for economist Daniel B. Suits. Similar to the Gini coefficient, the Suits...
tax or income tax is a tax imposed upon a person or property as distinct from a tax imposed upon a transaction, which is described as an indirect tax...
Income (income after deductions) was 13.6%. However, the tax is progressive, meaning that the tax rate increases with increased income. Over the last 20...
progressive average tax rate. A progressivetax is a tax in which the tax rate increases as the taxable base amount increases. The term “progressive”...
inefficiency, and helps reduce economic inequality. A land value tax is a progressivetax, in that the tax burden falls on land owners, because land ownership is...
International tax law distinguishes between an estate tax and an inheritance tax. An inheritance tax is a tax paid by a person who inherits money or property...
Tax brackets are the divisions at which tax rates change in a progressivetax system (or an explicitly regressive tax system, though that is rarer). Essentially...
rate. In case of tax brackets, commonly used for progressivetaxes, the average tax rate increases as taxable income increases through tax brackets, asymptoting...
(disambiguation) Progressive Era, a period of reform in the United States (c. 1890–1930) Progressivetax, a type of tax rate structure Progressive music, a type...
their own tax rates. They are referred to as "boxes". There is a progressivetax on wages, social security benefits and pensions. Thus there are tax brackets...
The Individual Income Tax in China (commonly abbreviated IIT) is administered on a progressivetax system with tax rates from 3 percent to 45 percent....
tax Excess burden of taxation Hall-Rabushka flat tax Land value tax Optimum tariff Pigovian taxProgressivetax Proportional tax Single taxTaxable income...
Modern liberalism in the United States Progressive conservatism Progressive Era Progressive Party Progressivetax Radicalism (historical) Reformist party...
general, the United States federal income tax is progressive, as rates of tax generally increase as taxable income increases, at least with respect to...
in the lowest two income tax brackets (whose highest tax bracket is less than 15%). (See progressivetax.) The reduced 15% tax rate on qualified dividends...
third. The state personal income tax is a progressivetax while the municipal income tax is a proportional tax above a certain income level. The types and...
of taxes, including: Agricultural Land Tax Land Value Tax Land Value Increment Tax House Tax Vehicle License Tax Deed Tax Stamp Tax Amusement Tax Unlike...
000 each for tax purposes. This results in a lower progressivetax rate being applied to each part, significantly reducing their overall tax liability....
taxes, and levied excise taxes on most items consumed and traded in the United States. The act also introduced the United States' first progressive tax...
Fair Tax was a proposed amendment to the Illinois state constitution that would have effectively changed the state income tax system from a flat tax to...
economic inefficiency, unlike other taxes. A land value tax also has progressivetax effects. Advocates of land value taxes argue that they would reduce economic...
with the first two being based on a totally Progressivetax rate and the rest being flat rate. Taxable income is derived after subtracting personal and...
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