Title: Progressive, Proportional, and Regressive Taxes | Boundless Economics
Headings: Progressive, Proportional, and Regressive Taxes
Progressive, Proportional, and Regressive Taxes
Comparing Marginal and Average Tax Rates
Learning Objectives
Key Takeaways
Key Points
Key Terms
Computing Taxes
Average and marginal tax rate
T/P = average tax rate
change in T/change in P = marginal tax rate
Types of Taxes
Progressive tax
Regressive tax
Proportional tax
Tax Incidence, Efficiency, and Fairness
Learning Objectives
Key Takeaways
Key Points
Key Terms
Example of Tax Incidence
Tax efficiency
Tax Incidence and Elasticity
Learning Objectives
Key Takeaways
Key Points
Key Terms
Inelastic Supply, Elastic Demand
Comparable Elasticities
Trading off Equity and Efficiency
Learning Objectives
Key Takeaways
Key Points
Key Terms
Horizontal Equity, Vertical Equity, and Taxes
Tax efficiency and tax equity

Content: a year, multi-year, or lifetime. Progressive taxes are imposed in an attempt to reduce the tax incidence of people with a lower ability-to-pay, as such taxes shift the incidence increasingly to those with a higher ability-to-pay. The opposite of a progressive tax is a regressive tax, where the relative tax rate or burden increases as an individual’s ability to pay it decreases. Progressive taxation: Graph demonstrates a progressive tax distribution on income that becomes regressive for top earners. Regressive tax
A regressive tax is a tax imposed in such a manner that the average tax rate decreases as the amount subject to taxation increases. “ Regressive” describes a distribution effect on income or expenditure, referring to the way the rate progresses from high to low, where the average tax rate exceeds the marginal tax rate. In terms of individual income and wealth, a regressive tax imposes a greater burden (relative to resources) on the poor than on the rich — there is an inverse relationship between the tax rate and the taxpayer’s ability to pay as measured by assets, consumption, or income. Proportional tax
A proportional tax is a tax imposed so that the tax rate is fixed, with no change as the taxable base amount increases or decreases. The amount of the tax is in proportion to the amount subject to taxation. “