What is a progressive tax system?

The progressive tax system is a tax system under which people pay more in taxes, the more they earn. Progressive taxes can also be based on expenditure, depending on how the tax system is structured. Almost every country uses a progressive tax system to collect taxes from its citizens, while the income tax systems used by many nations are a classic example of such a system. The opposite of progressive taxes is regressive taxes in which the tax liability decreases because people earn more money. On the other hand, the tax rate remains fixed regardless of income.

The organization of the progressive tax system may vary significantly. One of the common ways to organize the system is to divide the revenue into "parentheses". Depending on the holder that one occupies, the tax rate varies. For people below the poverty line, taxes are significantly reduced or dropped. As people begin to make more money, they are taxed in higher percentage, under the argument that they can meet their basic nEeds, and therefore have more one -off income, which means they can carry a higher tax burden. The highest tax group varies depending on the nation, while some countries tax people in high parentheses at a very high rate.

Some people claim that the progressive tax system should be based on expenditure rather than income, because expenditures can create a more accurate picture of how much "one -off" income is. For example, two people in the same income tax group who live in areas with radically different life costs may have a different amount of one -off income. The tax rate, which appears adequate in the area of ​​low living costs, can be too high to be carried in the area with high living costs. Taxation based on expenditure also creates the opening of tax luxury goods and services for another rate.

In defense of progressive tax there is a number of arguMentary system and a number of reasons for using such a system. Many of these arguments revolve around the idea that taxes can be used as a social equalizer to limit the gap between the rich and the poor, and at the same time ensure that money and do not feel much in the hands of several. Other people claim that such systems are unfair, because richer individuals pay more, especially after government agencies eliminate tax gaps that are commonly used to reduce tax liability.