Much of the progressivity in federal and state income tax law comes from graduated rate structures. Income taxes offer an important counterbalance as they tend to be progressive, which means that they ask more of families with a greater ability to pay. Most taxes levied by state and local governments are regressive, meaning that they charge higher rates, relative to income, for low- and middle-income taxpayers than for wealthy families.
Critically, a flat tax guarantees that wealthy families’ totalstate and local tax bill will be a lower share of their income than that paid by families of more modest means. Flat taxes have some surface appeal but come with significant disadvantages. In short: A flat tax is one where each taxpayer pays the same percentage of their income whereas a graduated tax applies higher rates to higher incomes. What’s the difference? And are states well served by the transition?
While most states have a graduated rate income tax, some state lawmakers have recently become enamored with the idea of moving toward flat rate taxes instead.
0 kommentar(er)
