Progressive taxation

Progressive taxation

Progressive taxation

Progressive tax is a type of taxing system where the rate of tax is directly proportional to the amount of cash being taxed. It means that higher rates are charged on huge sums of money were as lower rates are charged on small amounts of money. In a country with progressive tax system, high rates of tax are charged on high-income earners and low tax rates are imposed on low-income earners.

The main aim of progressive tax it is to cut down the tax incidence of people with lower ability to pay. This tax incidence is shifted to individuals and businesses with high ability to pay the tax. Progressive tax system has both positive and negative sides. This paper will give an insight look into these sides.

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To conclude, it is clear that progressive tax system is one in which the rate of tax is directly related to the quantity of cash being taxed. It is more unfair to those earning huge sums of money and to the society at large because it encourages laziness.

References
Chand, S. N. (2008). Public finance. New Delhi: Atlantic Publisher & Distributors.

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