Question by :Anonymous:: What does it mean that the federal income tax is a progressive tax?
What is a federal income tax and what is a progressive tax?
What is similar about these two different taxes?
Best answer:
Answer by Veevee
I think it means…you always have to pay it and they charge what they feel like each and every year? The federal government i mean.
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The federal income tax is what the federal government takes out of your annual income as a tax. A progressive tax is that as you make more money you pay a higher percentage of your income. Really poor people don’t pay taxes and as you make more money you pay a higher percentage of your taxable income.
A progressive tax is one where higher income people are taxed at higher rate, such as the tax brackets built into the federal income tax. People with lower incomes pay a lower tax rate that people at higher incomes. Conversely, a regressive tax has lower income people paying a higher percentage than high income people. An example of a regressive tax is social security tax because there is a cap on income that is taxable.
The Federal Income Tax IS a progressive tax. It’s not 2 different taxes!
It means that as your taxable income rises, so does the tax rate. For example, for a single filer the rate starts at 10% for taxable incomes of up to $ 7,825. It rises to 35% for all income over $ 349,700.
You are talking about the same thing. The federal income tax is a progressive tax that is collected based upon a percentage of income. There are teared rates, which when the rate is multiplied by income, the result is the amount of tax owed.
Interesting …. I find no mention of a “progressive tax” in the powers granted to the federal government by the U.S. Constitution. Must mean it’s either a direct or an indirect tax. But we know it can’t possibly be a direct tax since you probably don’t pay the exact same amount of money as your neighbors. Guess that makes it an excise tax.