PROGRESSIVE INCOME TAX Meaning and
Definition
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A progressive income tax refers to a taxation system where the percentage of taxes paid increases as income levels rise. It is based on the progressive principle that individuals with higher incomes should contribute a larger proportion of their earnings towards taxes compared to those with lower incomes. In this system, tax rates are structured in tiers or brackets, with each bracket corresponding to different income ranges.
Under a progressive income tax, those earning lower incomes are subjected to lower tax rates, whereas individuals with higher incomes face higher tax rates. This is done to promote fairness and equality by ensuring that those who have the ability to pay more do so, in order to support government services and programs.
The progressive income tax system is designed to reduce income inequality by redistributing wealth from the affluent to the less affluent. By implementing higher tax rates on high-income earners, the government receives a greater share of tax revenue from those who can afford it the most. The additional tax revenue can be utilized to fund public education, healthcare, social welfare programs, and infrastructure development, thereby improving societal well-being.
The concept of a progressive income tax is often debated, with proponents contending that it promotes equality and social justice, while opponents argue that it dampens economic growth and hinders incentive to succeed. Nevertheless, many countries around the world employ some form of progressive income tax, with the specific tax brackets and rates varying depending on their respective economic and social contexts.
