Pros and cons of flat tax rate9/2/2023 When progressive taxes are implemented, the government receives more income than it would otherwise. It creates a form of equality through patriotism, even if economically, two households are very far apart from each other. At the same time, actual revenues can be generated through taxes charged within the upper tax brackets. Although the contributions may be minimal, the process of paying taxes still creates a personalized investment into their citizenship. It allows everyone to invest into their country.Ī system of progressive taxation makes it possible for all households to contribute to the welfare of their country in some way. That means having less money for basic necessities when compared to wealthier households.Ģ. Although the poor and the rich would pay the same percentage of their income in taxes, a greater share of the poor household’s disposable income is taken away. When a universal system of taxation is implemented, then the overall economic burden is shouldered by the poorest households in a society. It places the majority of an economic burden where it belongs. Here are the pros and cons of a progressive tax system to consider. Then the next portion of their income, up to $37,950, would be taxed at the next rate level, which was 15%. For the taxpayer earning $418,400 or more, the first $9,325 of their taxable income would be taxed at 10%. Between these two levels are 5 additional income brackets.Įach taxpayer pays the amount of taxation for the income in that bracket. Those who earned more than $418,400 were taxed at a rate of 39.6%. In the 2017 tax cycle, those who earned up to $9,325 of taxable income were taxed at a rate of 10%. The United States currently uses a progressive tax system when assigning tax brackets and each bracket is adjusted to reflect changes due to inflation. Progressive taxation is a legislative policy that takes a greater percentage of a taxpayer’s income when they earn more money.
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