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Proportional, Progressive, & Regressive Taxes

Functions of Government. Proportional, Progressive, & Regressive Taxes. Proportional Taxes. Taxes the same percentage of income from everyone regardless of how much he or she earns. Progressive Taxes. The tax rate (percentage of earnings taken in taxes) increases as your income increases

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Proportional, Progressive, & Regressive Taxes

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  1. Functions of Government Proportional, Progressive, & Regressive Taxes

  2. Proportional Taxes • Taxes the same percentage of income from everyone regardless of how much he or she earns

  3. Progressive Taxes • The tax rate (percentage of earnings taken in taxes) increases as your income increases • The higher the income, the larger percentage of income paid as taxes • Federal income tax system

  4. Regressive Taxes • The percentage that you pay goes down as you earn more income • Social Security, gasoline, sales • The less income you earn, the higher percentage of your income goes to these taxes

  5. Analysis

  6. Wrap Up • all people have the same basic needs (e.g. food, water, shelter), but there are disparities in the amount of disposable income (money left after taxes) among people. • Both proportional taxes and regressive taxes impact the lower income earner more as most of their income pays for necessities compared to higher income earners. • Recognizing this principle, United States government tax policy attempts to compensate by taxing higher income earners more by using the progressive income tax.

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