Advantages and Disadvantages of Pregressive Income Taxation and Fixed Tax Rate System
Several primary motivations why taxes are charged by the government are to increase revenue, to regulate or restrict foreign investment and to protect consumers. Further motives consist of relocation of income, financial regulation, macroeconomic stabilization and support of particular goods.
The main difference between progressive income taxation and fixed tax rate system is that progressive income taxation is a tax system under which the average rate of income tax increases as income itself increases. In general it means that people, who are richer than others, pay a tax which is larger, compared to that which is paid by poor people. This tax system is designed in the way that taxes from the wealthier population covers the costs of the poorer segments of the society. On the other hand, fixed tax rate is usually expressed as a percentage or as a fixed amount to be paid – it means that everybody pays the same tax rate.…
- Advantages and Disadvantages of Pregressive Income Taxation and Fixed Tax Rate System
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