Progressive tax,
Definition of Progressive tax:
Income tax that takes a larger percentage of a larger income and a smaller percentage of a smaller income. For example, a tax on luxury cars. See also proportional tax and regressive tax.
A progressive tax is based on the taxpayer's ability to pay. It imposes a lower tax rate on low-income earners than on those with a higher income. This is usually achieved by creating tax brackets that group taxpayers by income ranges.
The rationale for a progressive tax is that a flat percentage tax would be a disproportionate burden for people with low incomes. The dollar amount owed may be smaller, but the effect on their real spending power is greater.
How to use Progressive tax in a sentence?
- A regressive tax imposes the same rate on all taxpayers, regardless of ability to pay. A sales tax is an example.
- If you start to make too much money in your business, you may get hit with a higher progressive tax than you were getting before.
- During the meeting, the government officials would discuss the importance of a progressive tax and if they would institute it or not.
- A progressive tax imposes a higher percentage rate on taxpayers who have higher incomes. The U.S. income tax system is an example.
- A flat tax is an income tax that is the same percentage of income for all. The U.S. payroll tax would be a flat tax except that it has an upper cap.
- Some people think the best way to make people pay to live in a country and use the infrastructure is the most fair option of a progressive tax .
Meaning of Progressive tax & Progressive tax Definition
