Title: Proportional Versus Progressive Taxation - Systems of Taxation - Proportional Principle of Tax - Progressive Principle of Tax - Definition and Explanation - Economicsconcepts.com
Headings: Proportional Versus Progressive Taxation:
Proportional Versus Progressive Taxation:
Systems of Taxation:
(1) Proportional Principle of Tax:
Definition and Explanation of Proportional Principle of Tax:
(2) Progressive Principle of Tax:
Definition and Explanation of Progressive Principle of Tax:
Arguments in Favor of Progressive Taxation:
Arguments Against Progressive Taxation:
Relevant Articles:

Content: The main advantages claimed for proportional system of taxation are that it is the must equitable method of raising revenue open to the state. When the individuals pay taxes to the government, their relative position remains the same after and before the tax. Moreover, this system is very simple. In the words of Say: "The merit of proportional taxation is that it is very simply". Meculoch was firm supporter of the principle of proportional taxation, He writes: "When you abandon the plain principle (of proportional) you are at sea without radar and compass and there is no amount of injustice you may not commit". The greatest drawback of the proportional system is that it does not entail equal sacrifice J.S. Mill and other supporters of this principle were not aware of this fact that when income increases, the marginal utility of money decreases. For instance, the marginal' utility of $10 to a man earning $4000 p.m. is much greater than to a man earning $10000 p.m. So. if rich and poor are taxed at the same rate, it will be most unjust and unequitable.