Progressive Taxes

Progressive Taxes

Introduction

Progressive taxation system can be defined as system under which taxes are levied upon individuals based on their income level. Higher the income an individual earns higher would be the taxes that will be charged on his income (www.credit-terms.com). Therefore an individual that has higher income will be obliged to pay more taxes than the person earns a low income. Progressive taxation system is dependent on two significant factors those are, income and expenditure, with an increase in income of an individual taxes also tend to rise, and simultaneously the greater the spending of the individual would be the higher taxes he will have to pay. The American taxation system is mainly dependent on Progressive Taxation. After the sixteenth amendment was passed by the congress it granted the federal government to retain taxes instead of passing them to the state according to their population, thus after which progressive tax system is being used by America (Buchheit, 2010).

Discussion

Progressive taxation system allows a greater proportion of taxes to be paid by the individuals to earn greater income, as compared to those with lower incomes. The government of America utilizes progressive taxation system to greater extent; it has divided the population into brackets based on their income levels (Hagopian, 2011).

How Progressive income Taxes Function

Government has defined tax brackets that will be levied upon people based on their income levels. This determines that as people will begin to earn greater amount of incomes they will have to pay more taxes to the government, thus as a result it creates an impact on individual's income (Hagopian, 2011).

Benefits of Progressive Taxation System

Progressive taxation is considered as a fair and just system for charging taxes from individuals on their income levels, it allows government to earn a greater amount of taxes. It allows ...