![]() ![]() ![]() Progressive tax is based on the principle that higher the income of the individual or bigger the business, the higher is the ability to pay tax. On the other hand, the tax for which the rate of taxation is universal and does not increase with increase in base amount, is flat tax. Assuming that more commonly used deductions are eliminated, the tax burden could shift dramatically to the lower and middle classes.The tax for which the rate of taxation increases with increase in the base amount, is termed as progressive tax. ![]() Tax rates range from 10% to 37%, depending on income. Shift tax burden to lower and middle classes: A flat tax system could greatly reduce taxes on the richest Americans.A flat tax could also eliminate altogether some taxes that wealthier individuals tend to pay, such as capital gains, dividends, and interest income taxes. The rate could end up being higher than is politically acceptable if a flat-rate tax system were to replace that revenue. ![]() Federal revenue totaled $1.52 trillion in the first four months of the fiscal year 2022, and more than two-thirds of that came from personal income taxes, including taxes on capital gains, dividends, and interest.
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