top-rated free essay

Difference Between Poroportional Tax and Progressive

By Krallaka Mar 20, 2011 470 Words
Difference between Proportional Tax and Progressive Tax
November 5th, 2010 | Adam | Posted in Economics | 569 views | No Comment 0Share
[pic][pic][pic][pic][pic]In one liner Progress tax is the tax with the increasing tax rate on different slabs and Proportional tax is of fixes rate tax to all slabs.  If the tax rate increases with gradual increase on income it is progressive tax. There are different slabs of incomes and proportional tax rates are defined by tax authorities.  It works as there are three slabs 0-1000, 1000-50000 and 50001-Above with a respective tax rate of 5%, 7% and 10%, the tax calculation for a person with income of 35000 will be on 5% for first 10000 and 7% for balance 25000.  This tax is considered to be most justified, as low income individuals have to pay less tax and more tax paid by high income people. Implementation is easy with less resistance by public. Progressive tax helps to decrease the inequality of wealth, which leads to number of social benefits.  It is also a view that rich people have more assets e.g., land, businesses, assets etc. which took more government infrastructure to taken care of these assets. So it is expected that rich should pay more tax as compare to poor people.  Unlike progressive tax a fixed tax rate is charged for all income individuals in proportional tax rate. For instance if the tax rate is set to 10% it would be remain same for a person whose taxable in income is $10000 and also for a person whose income is $70000.  [pic][pic][pic][pic]This system is not used in many developed economies and there is a debate that if this is a fair system or not.  Rate of tax is adjusted by keeping in view rich and poor people of a country, in this way poor will be suffered form a tax rate that brackets them with rich people, and also state suffers to collect revenue because greater tax revenue cannot be collected as high income individuals are paying the tax with general rate. In most economies of the world progressive tax is being used. There are some countries of world, which are using proportional tax rate as flat tax or with some modifications in proportional tax. Marginal flat tax, flat tax with deductions and hall-rabushka flat taxes are also discusses in this domain.  Proportional tax rate follows the communism school of thought but in modern communist societies are also changing their tax structure.  Progressive tax system has an impact of capitalism. It is said to be best system where state and public equally benefited of this method. The low income people have less tax burden whereas high income individuals pay more for contributed to the government’s earning.

Cite This Document

Related Documents

  • Difference Between Zakat And Tax

    ...Difference between Zakat and Tax First I would like to say that Zakat is related to religion and tax is related to government. In no way Zakat and tax can go together; they are different in many respects. While zakat has a religious sanctity, tax is not like that. Tax is collected from all citizens of a country. The government collects tax fo...

    Read More
  • Fair, Flat and Progressive Tax

    ...Tax Paper Fair Tax, Flat Tax and Progressive Tax: Which Would You Choose? Principles of Taxation Fair Tax, Flat Tax, and Progressive Tax: Which Would You Choose? As Tax Paying Americans, Tax Plans are a very important concept in our lives. Do you feel that there is a better option out there? In...

    Read More
  • Progressive V. Flat Tax

    ...Progressive Tax vs. Flat Tax The United States economy, as known by all, is not in its best shape. One way in which the government gains money is by imposing taxes on people. There are many taxes that are placed on different things that everyone needs or already has. The United States uses a taxation system which is criticized by many. T...

    Read More
  • progressive tax fairness

    ... Progressive Income Tax Fairness The issue of federal income tax policy has been one of hot debate and controversy for many years. Discussions and arguments on the issue have been presented on the floors of Congress, in the United States Supreme Court, used by politicians as political platforms, broadcasted in televised debates, and discussed ...

    Read More
  • “Progressive Proportional and Regressive Tax System"

    ...raise their revenue. Nearly all tax structures contain two basic parts: the tax base and the tax rate. The tax base is the amount to which the tax rate is applied to determine the tax due. The tax rate is basically a percentage rate applied to the tax base, and it can be progressive, regressive, or proportional. Progressive taxation refers ...

    Read More
  • The main differences between Tax Audit and Tax Investigation in Malaysia.

    ...Tax Investigation must be clearly separate from Tax Audit. Tax Investigation is an inspection of the tax payers business or individual books, records or document in order to ensure the tax payer had reported the correct amount of income and tax that need to pay in accordance with tax laws and provisions. Tax investigation will be carried on by s...

    Read More
  • Tax Comparison Between India & China


    Read More
  • Tax Avoidance and Tax Evasion

    ...Tax Avoidance Analysis Tax Avoidance is a legally manipulation for the corporations to lower their tax bill by structuring transactions, is also called tax planning. Different with Tax Evasion, the Tax Evasion is Criminal and completely illegal. And in generally, company which have more profit should have higher tax rate, but with the growth...

    Read More

Discover the Best Free Essays on StudyMode

Conquer writer's block once and for all.

High Quality Essays

Our library contains thousands of carefully selected free research papers and essays.

Popular Topics

No matter the topic you're researching, chances are we have it covered.