progressive tax
Definition
Noun: A progressive tax is a taxation system where the tax rate increases as the taxable amount (such as income or wealth) increases. This means individuals or entities with higher incomes pay a higher percentage of their income in tax compared to those with lower incomes.
Usage
The term is used to describe a specific principle of tax policy and public finance. * It functions as a compound noun. The core concept is the progressivity of the rate. * It is often discussed in contrast to a regressive tax (where the effective tax rate decreases as the amount increases) or a proportional tax (where the rate is constant regardless of the amount).
Examples
- Many countries use a progressive tax on personal income to promote greater income equality.
- Advocates argue that a progressive tax system is fairer because it is based on the ability to pay.
- The proposed reform would make the national income tax more progressive.
Advanced Usage
- Progressivity: The degree to which a tax is progressive is measured by its progressivity. A highly progressive tax has tax rates that rise sharply with income.
- Marginal Tax Rate: In a progressive income tax system, income is taxed in brackets. The marginal tax rate is the rate applied to the last dollar of income earned, which is key to understanding how progressive taxation works.
Variants and Related Words
- Progressive taxation (n): The practice or system of implementing progressive taxes.
- Graduated tax (n): A synonym for progressive tax, emphasizing the graduated rate structure.
- Regressive tax (n): A tax where the effective tax rate decreases as the amount subject to taxation increases (e.g., a flat sales tax).
- Proportional tax (n): A tax where the rate is constant, regardless of the amount subject to taxation.
Synonyms
- Graduated tax
Antonyms
- Regressive tax
- Flat tax (a type of proportional tax)
Noun
-
any tax in which the rate increases as the amount subject to taxation increases
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