A report on Tax and Progressive tax

Total revenue from direct and indirect taxes given as share of GDP in 2017
Average tax rates by income groups in France, the United Kingdom, and the United States, 1970 (left) and 2005 (right). Taxes were more progressive in 1970 than in 2005.
Pieter Brueghel the Younger, The tax collector's office, 1640
A caricature of William Pitt the Younger collecting the newly introduced income tax.
Substitution effect and income effect with a taxation on y good.
German marginal and average income tax rates display a progressive structure.
Budget's constraint shift after an introduction of a lump sum tax or a general tax on consumption or a proportional income tax.
"Tax The Rich" banner at an International Union of Socialist Youth campaign for a financial transaction tax.
The Laffer curve. In this case, the critical point is at a tax rate of 70%. Revenue increases until this peak, then it starts decreasing.
The function which defines the progressive approach to an income tax, may be mathematically defined as a piecewise function. In every piece (tax bracket), it must be computed cumulatively, considering the taxes which had already been computed to the previous tax brackets. Pictured is the effective income tax for Portugal in 2012 and 2013.
General government revenue, in % of GDP, from social contributions. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 20% by social contributions revenue.
Distribution of US federal taxes from 1979 to 2013, based on CBO Estimates.
Egyptian peasants seized for non-payment of taxes. (Pyramid Age)
Public finance revenue from taxes in % of GDP. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 32% by tax revenue.
Diagram illustrating deadweight costs of taxes

A progressive tax is a tax in which the tax rate increases as the taxable amount increases.

- Progressive tax

Some levy a flat percentage rate of taxation on personal annual income, but most scale taxes are progressive based on brackets of annual income amounts.

- Tax
Total revenue from direct and indirect taxes given as share of GDP in 2017

7 related topics with Alpha

Overall
Top marginal tax rate of the income tax (i.e. the maximum rate of taxation applied to the highest part of income)

Income tax

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Top marginal tax rate of the income tax (i.e. the maximum rate of taxation applied to the highest part of income)
William Pitt the Younger introduced a progressive income tax in 1798.
Punch cartoon (1907); illustrates the unpopularity amongst Punch readers of a proposed 1907 income tax by the Labour Party in the United Kingdom.
General government revenue, in % of GDP, from personal income taxes. For this data, the variance of GDP per capita with purchasing power parity (PPP) is explained in 27 % by tax revenue
Systems of taxation on personal income
Payroll and income tax by OECD Country

An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income).

The tax rate may increase as taxable income increases (referred to as graduated or progressive tax rates).

Flat tax

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A flat tax (short for flat-rate tax) is a tax with a single rate on the taxable amount, after accounting for any deductions or exemptions from the tax base.

Implementations are often progressive due to exemptions, or regressive in case of a maximum taxable amount.

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Tax rate

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In a tax system, the tax rate is the ratio (usually expressed as a percentage) at which a business or person is taxed.

In case of tax brackets, commonly used for progressive taxes, the average tax rate increases as taxable income increases through tax brackets, asymptoting to the top tax rate.

Taxable income

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Taxable income refers to the base upon which an income tax system imposes tax.

Many systems impose tax at different rates for differing types (e.g., capital gains or salaries) or levels of income (e.g., graduated rates).

Figure 1 – tax incidence in perfect competition

Tax incidence

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Figure 1 – tax incidence in perfect competition
Inelastic supply, elastic demand: the burden is on producers
Similar elasticities: burden shared

In economics, tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare.

That allows one to derive some inferences about the progressive nature of the tax system, according to principles of vertical equity.

Regressive tax

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A regressive tax is a tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases.

The opposite of a regressive tax is a progressive tax, in which the average tax rate increases as the amount subject to taxation rises.

Number of high-net-worth individuals in the world in 2011

Redistribution of income and wealth

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Number of high-net-worth individuals in the world in 2011

Redistribution of income and wealth is the transfer of income and wealth (including physical property) from some individuals to others through a social mechanism such as taxation, welfare, public services, land reform, monetary policies, confiscation, divorce or tort law.

In a progressive income tax system, a high income earner will pay a higher tax rate (a larger percentage of their income) than a low income earner; and therefore, will pay more total dollars per person.