The paper also considers the debate on optimal tax rates and the role of taxation in promoting economic development and government revenue. However, a proportional tax system may be simpler and more conducive to economic growth, especially for countries with high levels of tax evasion and avoidance. The paper concludes that a progressive tax system is more equitable and efficient in reducing income inequality and promoting social welfare. The paper examines the theoretical basis of both types of taxation, analyzes their implementation and administration, and evaluates their economic and social impacts. This legal research paper explores the two types of rates of income tax – proportional and progressive. 266–97, with Comments by Simon Kuznets, Alice Hanson, Margaret Reid, Dorothy Brady, Jerome Cornfield, 297–334 Reply, 324–9.This article is written by Utkarsh Upadhyay of Jamia Millia of 1 st year, Intern under Legal Vidhiya New York: National Bureau of Economic Research. In National Bureaus of Economic Research, Studies in income and wealth. Resource distribution patterns and the classification of families. Reprinted, New York: Augustus Kelley, 1972. What should be taxed, income or expenditure. Methods of graduating taxes on income and capital. Washington, DC: Brookings.Įdgeworth, F.Y. A voluntary tax? New perspectives on sophisticated estate tax avoidance. American Economic Review 66: 94–101.Ĭooper, G. The optimal taxation of commodities and income.
Journal of Economic Theory 2(3): 244–263.īradford, D.F., and H.S. This process is experimental and the keywords may be updated as the learning algorithm improves.Īaron, H.J. These keywords were added by machine and not by the authors. But when one attempts to be more precise about the relative degree of progressivity or regressivity of alternative taxes a number of problems arise. Property taxes can be subject to homestead exemptions or ‘circuit-breaker’ concessions. Food can be exempt from retail sales or value added taxes, although problems arise in drawing a line between food bought separately and that served in lunch counters and restaurants. However, many taxes that are ordinarily considered regressive can be modified to reduce the degree of regressiveness or even render them moderately progressive. Such taxes as income, spendings, succession, and net worth taxes are popularly regarded as progressive, if only because they are formally progressive in terms of their rate schedules, while flat rate payroll taxes and sales taxes are generally regarded as regressive. Characterizing taxes as progressive or regressive according to the relative degree to which they impose burdens on the wealthy and on the poor seems at first blush a fairly straightforward matter.
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