Opponents of proportional taxation claim that it unfairly burdens the poor and middle classes by eliminating deductions and broadening the tax base to include all income levels. The objective is that by encouraging individuals to earn more money, the country and people’s standard of living will improve. There are no exclusions, the rules are simple, and there should be no confusion regarding the rate because it is the same for all taxpayers.Īnother argument in favor of a proportional tax system is that it encourages people to work harder. Proponents of the proportional tax claim that a uniform tax rate is the most equitable system. The 10% tax rate is paid equally regardless of how much money a taxpayer earns. In comparison, a taxpayer earning $10,000 per year pays $1,000 in taxes, leaving him or her with $9,000 per year to cover all of his or her expenditures. For example, if the tax rate is 10%, an individual earning $200,000 per year would pay $20,000 in taxes, leaving him with $180,000 in income. Proportional Tax ExplainedĪ proportional tax system requires everyone to pay the same percentage of their income in taxes. It is the same for taxpayers with low, moderate, and high incomes. Definition of Proportional TaxĪ proportional tax, sometimes known as a flat tax, is one in which the percentage of a person’s income that is taxed remains constant regardless of how much money he or she earns. An example of a proportional tax is an income tax of 10% imposed on every income earner, regardless of their income. Unlike the others, the proportional tax on a person’s income remains unchanged regardless of how much money he or she earns. Other forms of taxation include progressive and regressive taxes. The proportional tax is one of the tax systems in use in the US.
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