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Progressive taxes are where the tax rate rises as taxable income increases (the higher the taxable income, the higher the rate).
Arguments in favor of progressive taxes:
- Equitable: higher income is subject to more tax.
- Productive: yields more revenue to the government compared to proportional tax.
- Economical: collection cost does not increase with increase in tax rate.
- Equal sacrifice: the marginal utility of money decreases with every increase in income hence for higher income individuals to make equal sacrifice, they pay higher taxes.
- Equalities in wealth distributions: the rich with less disposable income will forego their luxuries and the poor will benefit more from the more tax charged on the rich.
- Flexible: The government can increase or decrease the rates according to its requirements.
Wilfykil answered the question on February 13, 2019 at 08:25
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