Title: Tax Structures: Types & Concept - Video & Lesson Transcript | Study.com
Headings: Tax Structures: Types & Concept
Tax Structures: Types & Concept
Lesson Transcript
Types of Tax Structures
Regressive Tax Structure
Progressive Tax Structure
Proportional Tax Structure
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Content: Since low-income taxpayers spend a much higher percentage of their income on consumption than high-income taxpayers, who have more money to save and invest after satisfying their needs and wants, lower-income people are burdened more by the sales tax than higher income people whose income is subject to much less sales taxation. Lesson Summary
A government can use three different tax structures that will affect taxpayers differently. A regressive tax structure shifts the burden of taxation to low-income taxpayers because they pay a disproportionately higher rate of taxes. A progressive tax structure shifts the burden of taxation to high-income taxpayers because they pay a disproportionately higher rate of taxes. A proportional tax structure theoretically does not shift the tax burden onto any one group because the same tax rate applies to all taxpayers. Some argue that certain proportional taxes have regressive effects. Vocabulary & Definitions
Regressive tax structure: A regressive tax structure results in low-income individuals paying a higher percentage of their income on taxes than high-income individuals. Progressive tax structure: In a progressive tax system, taxpayers making more money pay higher tax rates than those making less money.