Progressive Tax is the tax structure where the Tax levied varies in proportion to the income of an individual or organization. It also includes financing government and public projects along with the business environment in the country favourable for economic growth.Īlmost all levied taxes can be broadly classified into three specific categories. Government imposes a tax on its citizens and businesses as an act of raising revenue that is used to meet budgetary demands. There are many other taxes that also do not differentiate between classes, but they are based on several criteria like age, source of income, business or profession and so on.Īlso Read: Guide on Paying Self Assessment Tax - Learn About Self Assessment Tax Meaning & How to Calculate It Importance of Taxes This concept ensures equality between the super rich and poor in terms of tax. Proportional tax is a tax that is levied at a single rate on the income, regardless of level or kind. Proportional taxation intends to create greater equality between marginal tax rates and average tax rates paid.ĭid You Know? Supporters of a proportional tax system propose that it provides taxpayers incentive to earn more because they are not penalized with a higher tax bracket.

While we shall be getting into the concept of Proportional Tax, we shall also be delving into other categories of Taxes so that the whole picture gets clear to you. It is essential to look at different categories of taxes and how they impact organizations and individuals. However, understanding taxes' intricacies and applicability are fundamental in real life. Taxes are something that everyone is aware of in a general way.

Flat tax vs proportional tax