Title: Progressive Tax System: Definition, Pros & Cons - Video & Lesson Transcript | Study.com
Headings: Progressive Tax System: Definition, Pros & Cons
Progressive Tax System: Definition, Pros & Cons
Lesson Transcript
What Is a Progressive Tax System?
Pros of the Progressive Tax System
Cons of the Progressive Tax System
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Progressive Tax System: Definition, Pros & Cons
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Content: To proponents of this argument, a flat tax ,or tax where everyone pays the same percentage, would be more fair. Class Warfare - This is the conflict and tension that can result between the different socioeconomic classes because of how priorities and interests differ. If a wealthy individual works 60 hours a week and has made a lot of money, he or she may have a problem with giving a higher percentage of income to help pay for welfare programs where they believe some individuals just aren't motivated enough to improve their situation. On the other hand, individuals with lower income may believe wealthy people in society are simply self-serving and don't understand the obstacles faced by individuals with lower income. As a result, they might view replacing the progressive tax as an act of class warfare. Penalizes Those That Work Harder - Many argue that progressive taxes don't motivate people to work harder and earn a better living. If you know that you have to give up more and more money with every dollar that you make, you might be inclined to stop working so hard. If you decide to keep working hard, your reward is that you have to pay more and more taxes. Hiding of Assets - Have you ever heard of someone talking about a Swiss bank account or account in the Cayman Islands? When people are taxed on more and more of their money, it leads to a desire by many to try and avoid paying these taxes or hide the money that they may have worked so hard to attain.