explain progressive, regressive and proportional tax.
Answers
Answer:
percentage of income from high-income groups than from low-income groups. proportional tax—A tax that takes the same percentage of income from all income groups. regressive tax—A tax that takes a larger percentage of income from low-income groups than from high-income groups.
Explanation:
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Answer:
Understanding Taxes 1
Worksheet Solutions Comparing Regressive, Progressive, and Proportional Taxes
Theme 3: Fairness in Taxes
Lesson 5: How Taxes Affect Us
Key Terms
progressive tax—A tax that takes a larger percentage of income from high-income groups
than from low-income groups.
proportional tax—A tax that takes the same percentage of income from all income groups.
regressive tax—A tax that takes a larger percentage of income from low-income groups
than from high-income groups.
vertical equity—The concept that people in different income groups should pay different
rates of taxes or different percentages of their incomes as taxes. “Unequals should be taxed
unequally.”
Summary
In the United States there are progressive income taxes and regressive Social Security and
property taxes. Excise taxes and user fees are somewhat regressive. This combination
results in taxpayers paying roughly the same percentage of their incomes in taxes, creating a
proportional system. Vertical equity is the concept that people in different income groups
should pay different rates of taxes.
Activity 1
Complete the line graphs to compare how a regressive tax, a progressive tax, and a
proportional tax affect different income groups.
1. Plot the curve on the graphs by joining the dots.