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What are the differences between progressive, regressive and flat taxes?

Sagot :

Lanuel

Answer:

Find answers below.

Explanation:

Taxation can be defined as the involuntary or compulsory fees levied on individuals or business entities by the government to generate revenues used for funding public institutions and activities.

The difference between a progressive, regressive and flat tax are;

1. Progressive taxation: it involves charging individuals having higher incomes a higher percentage of their total income.

- For instance, John pays 30% on $70,000 and Joyce pays 10% on $45.000.

2. Regressive taxation: it involves charging individuals with low incomes a higher percentage of their total income and vice-versa.

- For instance, John pays 15% on $60,000 and Joyce pays 20% on $36,000.

3. Flat tax: it's a tax system which typically involves applying a single tax rate to all levels of income earned by employees, regardless of the amount being earned.

- For example, all of the employees in a country are levied 15% tax on the amount of money earned.

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