Title: What Is the Difference Between Progressive, Regressive & Proportional Taxes? | Sapling
Headings: What Is the Difference Between Progressive, Regressive & Proportional Taxes?
What Is the Difference Between Progressive, Regressive & Proportional Taxes?
Tip
Progressive Tax Systems
Understanding Regressive Taxes
Proportional Tax Systems
Multiple Category Taxes

Content: Tip
The difference between progressive, regressive and proportional tax systems lies in how the government assesses a taxpayer's tax liability or obligation. Progressive Tax Systems
A progressive tax system means the proportion of income paid in taxes increases as the taxpayer's income increases. In short, a progressive tax system shifts the tax burden toward the wealthy. The federal income tax is an example of a progressive tax, where the tax rate increases as taxable income increases. The U.S. and most states impose income taxes on wages, salaries, self-employment income and business profits, as well as on "unearned" income from other sources. The income tax system allows individuals and businesses to use a variety of exclusions and deductions to reduce taxable income. Understanding Regressive Taxes
A regressive tax system means low-income people pay a larger proportion of income in taxes than do wealthy people. Basically, a regressive tax system shifts the tax burden toward lower-income taxpayers. Sales taxes are regressive, because lower-income families tend to spend a larger proportion of their income on taxable goods than do wealthy families. Real estate property taxes also tend to be regressive because they are based on the appraised value of property rather than on the taxpayer's ability to pay, and because lower-income taxpayers tend to have more of their assets in taxable real estate than wealthy taxpayers.