Title: Proportional Tax Defined
Headings: Proportional Tax
Proportional Tax
What Is a Proportional Tax?
Key Takeaways
Understanding Proportional Taxation
Example of Proportional Taxes
Pros and Cons of Proportional Taxes

Content: A tax is said to be regressive if it has an inverse association where the average tax carries less impact on higher-income individuals or businesses. Opponents of the proportional tax have claimed that higher-income earners should pay a higher percentage than poorer taxpayers. They see the system as placing a more significant burden on middle-income earners to carry a large portion of government spending. While the percentage of tax is the same, which can be regarded as fair, the after-tax effect on low-income earners is more burdensome than for high-income earners. To understand a proportional tax system, it is important to also look at how it defines income. If a system has generous deductions, then low-income earners may be exempt from tax, thus eliminating, at least in part, the regressive aspects of the tax. Variations of the proportional tax include allowing mortgage deductions and setting lower income levels.