Three Types of Taxes Progressive Tax Regressive Tax Proportional Tax Progressive Tax A progressive tax is a tax for which the percentage of income paid in taxes increases as income increases Our Federal Taxes System is Progressive ID: 384707
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Types of TaxesSlide2
Three Types of Taxes
Progressive Tax
Regressive Tax
Proportional TaxSlide3
Progressive Tax
A progressive tax is a tax for which the percentage of income paid in taxes increases as income increases.
Our Federal Taxes System is Progressive
For example, Jack earns $100,000 annually and pays $20,000 in Federal Tax.
Mike earns $60,000 annually and pays $15,000 in Federal Tax.Slide4
Proportional Tax
A proportional tax is a tax for which the percentage of income paid in taxes remains the same for all income levels.
For example, Leslie earns $350,000 a year. Tony earns $90,000 a year.
If both own a house worth $200,000, in the same county, they would both pay the same percentage in tax on their property. For example – they both have a property tax bill of $3,500 a year. Slide5
Regressive Tax
A tax is regressive when the percentage of income paid in taxes decreases as income increases.
Regressive tax place a greater burden on lower income levels than those who earn a higher income.
For example, although the sales tax remains constant, a sales tax is regressive.
This is because higher-income households spend a lower proportion of their incomes on taxable goods and services.
As a result, although they may pay more actual dollars in sales taxes, the proportion of their income spent on sales taxes is lower than that of lower-income households.Slide6
Examples:
Progressive Tax – Federal income tax
Proportional Tax – Property Tax and Social Security and Medicare tax withheld from one’s pay.
Regressive Tax – Sales Tax