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Taxes: Progressive, Proportional, and Regressive

Christine A. Wernet

Subject Economics
Sociology » Government, Politics, and Law

Key-Topics capitalism, taxation

DOI: 10.1111/b.9781405124331.2007.x


The generation of government revenue and the redistribution of income among the population are two central reasons for taxation ( Davies 1986 ). Governments have used taxation as a means to generate revenue for centuries, and some governments have been using taxation as a means of resource reallocation since at least the 1800s. The three main types of taxation, progressive, proportional and regressive taxes, are outlined. Progressive taxes are taxes that require those who earn more money to pay higher taxes. Personal income taxes in the US are progressive. For example, those who have a family income of $100,000 or higher may pay as much as 29 percent of their total income in annual taxes, while those in the lowest income bracket, who may have a family income of $10,000, pay approximately 4.6 percent of their total income in annual taxes ( Mishel et al. 1999 ). Proponents of progressive taxes argue that wealthy individuals have a moral obligation to society to pay higher taxes. Opponents argue that progressive income taxation has a negative effect on capital formation and economic growth. Proportional taxes refer to taxes that equally burden all income groups in a society. Proportional taxes are sometimes referred to as a flat tax. For example, if a society had a proportional income tax of 15 percent, a family with an annual income of $100,000 would pay $15,000 a year in income taxes, ... log in or subscribe to read full text

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