Preview

“Progressive Proportional and Regressive Tax System"

Good Essays
Open Document
Open Document
608 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
“Progressive Proportional and Regressive Tax System"
Throughout history, every organized society had some form of government. In free societies, the goals of government have been to protect individual freedoms and to promote the well-being of society as a whole. To achieve those goals and meet the expanses all governments need some revenue, and that revenue is raised mostly through taxes. In USA, governments levy several different types of taxes on individuals and businesses. The Federal Government relies mainly on income taxes for its revenue. State governments depend on both income and sales taxes. Most county and city governments use property taxes to raise their revenue. Nearly all tax structures contain two basic parts: the tax base and the tax rate. The tax base is the amount to which the tax rate is applied to determine the tax due. The tax rate is basically a percentage rate applied to the tax base, and it can be progressive, regressive, or proportional. Progressive taxation refers to a tax that takes a larger percentage from the income of high-income people than it does from low-income people.
And this is a basic principle underlying the income tax laws of the United States - people should be taxed according to their "ability to pay." For example, a person making $200,000 in a year might pay 30% of his income in taxes ($60,000), while someone with an income of $30,000 might pay only a 10% tax rate ($3,000 in taxes). Most income taxes in US are considered progressive. What can be disadvantage of progressive tax? Well, some individuals may think that progressive tax is discouraging the success. Why to work hard, and try to increase income and wealth, when half of that will be “taken away” in taxes!? It is simply unfair! Because the taxes are then redistributed to poorer individuals through government aid programs, some see this as socialism. But despite

opposition most economists believe that progressive taxes are the best form of taxation, because the lower class individuals, who are

You May Also Find These Documents Helpful

  • Powerful Essays

    James Hall.Chapter16

    • 2254 Words
    • 10 Pages

    Replacing the progressive rate structure of the federal personal income tax with a proportional one would make the tax more regressive (or less progressive). However, the various exemptions, deductions, and credits must still be considered. Many people who support a proportional rate structure do so as a means of simplifying the personal income tax. It is really only simplified if the number of exemptions, deductions, and credits are reduced or eliminated. It might be useful to discuss how a proportional tax rate structure could be combined with various exemptions, etc., to make the tax more progressive, and whether this is appropriate.…

    • 2254 Words
    • 10 Pages
    Powerful Essays
  • Good Essays

    A “tax can be defined as a payment to support the cost of government” (Jones, 2014). Taxes are implemented by our government to raise revenues for specific purposes. Our government implements local, state, and federal taxes. Each jurisdiction is subjected to the authority of the government above them.…

    • 768 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Ato1 Study Session

    • 6939 Words
    • 28 Pages

    The United States of America is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, payroll, property, sales, imports, estates and gifts, as well as various fees. Taxes are imposed on net income of individuals and corporations by the federal, most state, and some local governments. Citizens and residents are taxed on worldwide income and allowed a credit for foreign taxes. Income subject to tax is determined under tax rules, not accounting principles, and includes almost all income from whatever source. Most business expenses reduce taxable income, though limits apply to a few expenses.…

    • 6939 Words
    • 28 Pages
    Good Essays
  • Good Essays

    The role of the Constitution in creating tax law is ultimate source of the power to tax. Current tax law is resulting from Sixteenth Amendment to the Constitution as passed by the Congress on July 12, 1909. The amendment stated: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived without apportionment among the several States, and without regard to any census or…

    • 615 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    The tax system in the United States has changed throughout the years, with many attempts to make it "fair" or "equal" while at the same time generating enough income for the United States government to thrive. It is a complex issue, and a controversial one at that. While it may not be possible for our tax system to ever be fair, it is important to make sure it doesn 't put more financial stress and pressure on one group than on another.…

    • 1187 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    Classical Liberalists think that every man or women is responsible for their own destiny, and that the government should not hinder the individuals, or businesses pursuit of it. They also have no mandate to correct the results of this, regardless of how positive, or negative. They think that people should not be governed differently based on how successful they are. Economic discrimination is a two way street, and wealthy individuals should not lose excess income, or opportunity. This is why they want a flat tax, similar to GST, to replace the progressive income tax we have now. Reform liberalist’s believe that low-income individuals will spend a greater proportion of their income on necessities, rather than luxury goods. Therefore they should be subject to lower income tax rates. A progressive income tax is ideal for a Reform Liberalist, as the increased tax revenue from the higher earners will be redistributed to social programs that provide welfare and equality of opportunity for the poor.…

    • 648 Words
    • 3 Pages
    Powerful Essays
  • Good Essays

    Money seems to be the root of the problems that surround us in our daily lives. Depending on how much we earn from employment that number is concentrated on our social class in society. However, regardless of our social class we all pay a form of federal tax. Federal tax is a tax levied by the United States Internal Revenue Service on yearly earnings of employees, corporations, trusts, and other legal entities. These taxes that are collected contribute to approximately 47 percent of the federal government’s revenue. This money subsidizes national defense and funds federal programs such as welfare and infrastructure. A percentage of our income is taxed according to the amount we earn; it varies from ten percent when making zero to 20,000 dollars to 30 percent when making 50,000 dollars and above. The controversy of eradicating federal income tax involves all American residents…

    • 628 Words
    • 3 Pages
    Good Essays
  • Good Essays

    , it shows us that in the state of Texas, the poorest 20% of the state pays 12.2% in taxes of their income, the middle 60% pays 7.6%, and the top 1% pays 3.3%. Being a regressive state results in having people who have a hard time supporting themselves paying more than people who have no problem with their finances. With an income tax, it would turn the state into a “progressive state” meaning that the people will be taxed based on their income, and it would be an appropriate amount for what they earn.…

    • 539 Words
    • 3 Pages
    Good Essays
  • Good Essays

    | Higher taxes (primarily for the wealthy) and a larger government are necessary to address inequity/injustice in society (government should help the poor and needy using tax dollars from the rich). Support a large government to provide for the needs of the people and create equality. Taxes enable the government to create jobs and provide welfare programs for those in need. Government programs are a caring way to provide for the poor and needy in society.…

    • 2923 Words
    • 12 Pages
    Good Essays
  • Good Essays

    Essay On Flat Tax

    • 507 Words
    • 3 Pages

    It is unfair to pay more for the same service as people who pay less. It is silly to force someone to pay extra taxes because they're rich. It is like communism. It would be an opinion if someone wants to pay more tax and it would be considered prestigious. This will solve all problems and it will help the economy if it mainstream, but some people disagree with this and think that rich people should pay higher taxes because some people can't even afford groceries or to pay their bills. They are paying the same thing as the rich people so this is not fair for poor people to pay the same as rich…

    • 507 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Most elected officials, when campaigning, claim to strive to lower taxes. However, the reality is quite different. With the budget and national debt, money has to be extremely divided in the federal government. In order for entitlement programs to continue to exist, they need public funding. Most of the country, especially those that depend on money from these programs want their existence guaranteed. Looking at the difficulty of shutting any federal program, officials have no choice but to continue the current funding of the program if they want to keep their approval ratings up. In order to get funding, taxes would either need to stay the same or increase. Many citizens believe that the federal government should tax the rich more, however the rich also help many officials when they’re campaigning and so they don’t want to get on their negative side. Elected officials are always in a tight spot when it comes to policy making because they cannot change one thing without it affecting another. The public will always be divided on the issues, so they cannot guarantee…

    • 655 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Socioeconomic Urban Division

    • 2524 Words
    • 11 Pages

    Distributive polices come from the policy maker directly to the beneficiary. For example, certain tax polices have been established to ensure that the higher socio-economic class does not have to pay so much in taxes through the itemization of exemptions. One example is a corporation allowing giving students scholarships for college, or giving money to charity would be a major benefit. Nevertheless, redistributive policies are designed to promote equity in the delivery of goods and services. These polices are only evident when there is a dysfunction in the marketplace or the human social domain. Redistributive policies come in the form of legislative acts, mandates, court decisions, or executive orders. Therefore, due to the lack of support to the lower socio-economic class, distributive polices are a quick fix to a dysfunctional society. For example, the lower classes and poorer school districts believe the No Child Left Behind Act served no purpose but political rhetoric and promises that were never delivered. In addition, not every redistributive policy ends up helping the lower classes, especially at the local level. Redistribution should always be dealt with at the national level because it does not promote long- term economic development of the community. Nevertheless, social class is a major factor of whether an individual will receive…

    • 2524 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    If every household gave the same amount of their income in taxes than the disparity of income would be less. Many Americans today don’t care much for the tax code system, and it’s not because they pay too much. It’s that they feel that the more “wealthy” aren’t paying their fair share. Well according to The Center of American Progress the OECD report finds that the richest 10% of American households earn about 28% of the overall income pie. That’s a lot. Surely they can spare a…

    • 893 Words
    • 4 Pages
    Good Essays
  • Good Essays

    Offering tax breaks for those at the bottom should, in theory, give those taxpayers the opportunity to increase their wealth and work their way out of poverty. And, of course, progressive tax should encourage the distribution of wealth. People don’t like a progressive tax because it treats people differently: those at the top are charged with paying more, as a percentage of income, than those at the bottom. While it’s true that some taxpayers - like Warren Buffett - pay a lower effective tax rate than many in the middle class, the U.S. still has one of the most progressive systems in the world, collecting the largest share of taxes from those at the top. According to the Tax Foundation, the top 1% of taxpayers have consistently paid more in federal income taxes than the bottom 90% since 2003 and that share has increased almost every year since 1980 .…

    • 1535 Words
    • 7 Pages
    Good Essays
  • Good Essays

    Regressive Tax

    • 572 Words
    • 2 Pages

    The primary income taxation structure in the United States should be a regressive tax structure. A regressive tax rate decreases with an increase in the tax base. This means, the lower the amount of income a person earns, the greater the share of that income will go towards paying taxes. The income tax should become a regressive tax because every tax bracket would then pay roughly the same dollar amount in taxes to the government out of income. Everyone paying the same dollar amount in taxes makes all tax payers equal. The negative impact of this is that lower income earners will pay a higher percentage of their income to taxes. This does not necessarily make a regressive income tax unfair.…

    • 572 Words
    • 2 Pages
    Good Essays