What is a progressive tax system?

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The progressive tax is the current income tax system in the United States. The system taxes higher-income individuals at greater rates than lower-income individuals.

Progressive Tax in a Sales Tax

The sales tax rate is the same for every person in a particular locale. But sales tax can still be progressive because people with higher incomes typically buy more goods than lower income individuals, thereby paying more tax.

Creation

Adam Smith and Karl Marx were the first to consider progressive tax. Smith discusses it in in his book "The Wealth of Nations," while Karl Marx wrote about progressive tax in "The Communist Manifesto." France was the first government to use the system.

Other Tax Systems

Other tax systems that are compared to the progressive tax are the flat tax and regressive tax. The regressive tax is the opposite of the progressive tax, in which higher tax rates apply to individuals with lower income. A flat tax applies the same rate to all, regardless of income.

Countries Using a Progressive Tax

Besides the United States and France, several other prominent nations, such as Great Britain and Australia, have implemented a progressive tax system.

Progressive Tax in the United States

In the United States for 2010, the lowest tax rate for a single person with an income between $0 and $8,375 is 10 percent. An individual with income over $373,650 is in the highest tax bracket--35 percent.

Source:

Investopedia: Progressive Tax

Investopedia: Regressive Tax

Investopedia: Flat Tax

Berkeley: How Progressive is the U.S. Federal Tax System? A Historical and International Perspective

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What is a progressive tax system?

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