Question

1. How well does a progressive income tax and a flat income tax meet the three principles of fairness put forward by the Tax Policy Center?

Answer 1

The principle of equity,i.e., fairness. The progressive tax system needs upper income class of people to pay a greater share of their incomes for the purpose of tax than those of the lower income. The personal income taxes charged are usually progressive in nature. Whereas, in flat income tax system also known as proportional tax system same amount of income is taken from all types of families.
The principle of adequacy. The progressive tax system targets an upper class of people for paying greater amount of their income than that of the lower class, the adequacy factor in such system is a mixture of both low and high targets to be attained. In case of flat income tax system where same amount is acquired from all classes of people, the sense of adequacy remains intact.
The principle of simplicity. The progressive tax system has a simple goal of collecting more from higher classes and less from lower ones. In case of flat income tax system, a simple fact to be considered is that same level of tax collected from each level of person.