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Headings: Progresssive Tax Definition
Progresssive Tax Definition
What is a Progresssive Tax
Key Points
Advantages of a Progressive Tax
1. Reduces Burden on Poor
2. Higher Revenue
3. Support for the poor
4. Reduces Inequality
5. Lower economic inequality
Disadvantages of a Progressive Tax
1. Disincentivizes Wealth creation
2. Lower Government Revenue
3. Capital Flight
4. High Administrative Costs
5. Poorly Defined
Examples of Progressive Tax
Estate Tax
Income Tax
Luxury Sales Tax
Related Topics
General FAQs on Progressive Tax
Further Reading

Content: Higher Revenue
By taxing the rich more, the government may in fact increase its revenue – although this may depend on how they react, i.e. moving income to an offshore account. However, this may bring in more revenue up to a certain point, especially if the rate is still competitive with other nations. For instance, a progressive tax that went from 10 all the way to 50 percent may help increase revenues – particularly if this is similar to other nations. Those on a higher income would be paying a higher rate of 50 percent as opposed to 10. 3. Support for the poor
A more progressive tax system can bring in higher levels of revenue, which is needed in order to provide social security services. It helps to provide the necessary revenue to fund housing assistance, unemployment benefits, disability benefits, as well as income support for those on low incomes. 4. Reduces Inequality
One of the biggest issues with regard to inequality is that of underfunded public services. The argument is that when services such as public education are underfunded, it creates a poverty trap whereby individuals are unable to access sufficient skills to move up the income ladder.