A progressive taxation is a system that charges higher taxes on a higher level of income groups and lower rates are applied on lower-income groups. As per the IRS website, the latest progressive taxation slabs are as follows.
|
TAX BRACKET |
TAX RATE |
TAX LIABILITY |
|
35%, for incomes over $207,350 |
35% |
|
|
32% for incomes over $163,300 |
32% |
Maximum $14,517.5 |
|
24% for incomes over $85,525 |
24% |
Maximum $18,666 |
|
22% for incomes over $40,125 |
22% |
Maximum $9988 |
|
12% for incomes over $9,875 |
12% |
Maximum $3630 |
|
10% for income up to $9,875 |
10% |
Maximum $987.50 |
From the above chart, it is clear that a person who is earning more is charged a high tax rate. For example, a person who is earning up to $9875 will be charged a maximum of $987.50 per year. A great advantage of the progressive tax system is that the lower-income group has more amounts to spend and fewer taxes to pay, which in turn increases the circulation of money in the economy.
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