Question

In advanced economies, the tax structure is directly related to its tax base and the variation of its tax rate. This is important because the amount of tax collected comes from the tax base to which the tax rate is applied.

In this week’s main post, you will create a mystery scenario that aligns to one possible tax rate structure. Your peers will respond to your post by determining which tax rate structure you are describing and provide their rational.

• In your first post, create a scenario that exemplifies one of the following tax rate structures:
  • Progressive
  • Regressive
  • Proportional
• Within your scenario, provide evidence of the administrative procedures and tax laws.

Answer 1

- Tax systems in the U.S. fall into three principle classifications: regressive, proportional, and progressive and two of the three effect high-and low-income workers in an unexpected way. Regressive taxes greaterly affect lower-income people than the affluent.

- A regressive tax collects a similar rate on items or merchandise bought paying little mind to the purchaser's income and is believed to be lopsidedly troublesome on low workers.

- A proportional tax applies a similar tax rate to all people paying little mind to income.

- A progressive tax forces a more prominent level of taxation on higher income levels, working on the hypothesis that high-income workers can bear to pay more.

A progressive tax depends on the taxpayer's capacity to pay. It forces a lower tax rate on low-income workers than on those with a higher income. This is generally accomplished by making tax sections that bunch taxpayers by income ranges.

The income tax system in the United States is viewed as a progressive system, despite the fact that it has been becoming flatter in late decades. In 2020, there are just four tax sections, with paces of 10%, 12%, 22%, and 24%. There were 16 tax sections in 1985.

Progressive tax system diminishes the tax trouble on the individuals who would least be able to bear to pay. That leaves more cash in the pockets of low-breadwinners, who are probably going to burn through the entirety of that cash on fundamental products and animate the economy all the while. A progressive tax system likewise will in general gather more taxes than flat taxes or regressive taxes, as the most noteworthy level of taxes is gathered from the most noteworthy measures of cash. However some experts of progressive taxes believe them to be a disincentive to progress.

It can be designed on the following lines :