Progressive Taxation: Some Essential Facts

Progressive taxation is described as a type of taxation which imposes a higher percentage rate on the earnings of a high-level income community as compared to what it levies on the earnings of a low-level income community. If the earnings of a person goes up, the rate of tax payable by him also goes up in proportion to that. Therefore, this is a form of graduated tax or progressive tax. The fundamental principle behind this kind of a taxation rule is that those people who make more money are able to save a higher amount of money and so, must pay the government a higher amount of tax.

As per the data provided by the Department of Treasury in the United States, 17.4% of the overall federal tax is paid by 0.1% of the highest income group and 3.03% of the overall individual tax is paid by 50% of the low-level income group. This demonstrates that the taxation system in the U.S. is established on the rationale of progressiveness. The principal aim of imposing taxes in this manner is to collect revenue for the Federal government in order to ensure that the funds can be used for different economic, social and political operations.

A large number of people debate that this taxation arrangement is short of a logical coordinating rule since governments have quite frequently made legal amendments to taxation rules for satisfying their proponents and particular segments of the society. A significant portion of the society is against progressive taxation arrangement. They think this kind of a taxation system must not be implemented to everybody and they have an ethical and legitimate right for not paying taxes. They think it to be unlawful and unfair on the Federal government’s part. They contend that only the affluent must be taxed considerably and those individuals who are involved in a broad variety of tax evasion tactics. In a number of cases, people have gone to the court of law for amending the tax regulations, creating progressive taxation an issue of hot legal debate or argument.

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