What is the difference between a progressive tax, a proportional tax, and a regressive tax? Give...

What is the difference between a progressive tax, a proportional tax, and a regressive tax? Give an example of each type of tax

Expert Solution

REGRESSIVE TAXES

In Regressive tax system one with low income pays an high tax of their income than individuals with lower income. Because in this system tax is considered as the percentage of value of purchased or owned assets by the tax payer. Here tax has no relation with one income level or his earnings. Property taxes , excise taxes are the examples. Individual with higher income only pays a lower percentage of their income.

PROPOTIONAL TAXES
Proportional tax system or flat tax system is tax system in which every individual have to pay equal tax value . Income or asset of one is not considered in the system. Average and marginal tax rates are equal here. It is considered as a system which encourages people to earn more as earnings doesn’t changes thee tax by proponents off the system. It is also observed as a opportunity to spend and invest more for business by them. Per capita taxes , occupational taxes are examples.

PROGRESSIVE TAXES

In progressive tax system the tax amount depends on income off people. In the system income is considered and thus people with higher income has to pay more as compared to lower income people. Tax goes on increasing as the income of people. The capacity for paying tax is evaluated in the system. The system shows that high income people can pay more tax. Estate tax is a best example for progressive taxes.

Rahul Sunny answered 2 years ago

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