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Progressive Tax Structure

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A progressive tax structure is one of several types of tax structures.

According to the Internal Revenue Service (IRS), the three main types of tax structures are proportional, regressive and progressive. The proportional tax structure, also known as a flat tax, taxes all income levels at the same rate. The IRS states that the regressive tax structure "takes a larger percentage of income from low-income groups than from high-income groups." The progressive tax structure is the third main type of tax structure.

  1. Definition

    • The IRS states that the progressive tax structure takes more money from higher income groups and is therefore considered the "fairest means of taxation." The progressive tax structure used in the United States is also the most commonly used personal income tax structure in the world.

    Examples

    • The IRS notes that many states also use the progressive tax structure to determine personal income taxes. In addition, taxes on inheritances are based on the progressive tax structure.

    Considerations

    • According to the IRS, the progressive tax structure employs a concept known as "ability to pay." This concept states that "people with different amounts of wealth or different amounts of income should pay tax at different rates."

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