Progressive tax

Common card · No. 224482

A progressive tax 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 from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate. 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 on people with a lower ability to pay, as such taxes shift the incidence increasingly onto those with a higher ability to pay. The opposite of a progressive tax is a regressive tax, such as a sales tax or tariffs, where the poor pay a larger proportion of their income compared to the rich despite paying the same amount (for example, spending on groceries and food staples varies little against income, so the poor pay similar to the rich even while latter has much higher income). The term is frequently applied to personal income taxes, in which people with lower income pay a lower...

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