Question

We have progressive income tax structure. Are you for it or against it? Give your argument why do you think so?

Answer 1

Progressive tax structure is a situation when the marginal tax of the individual increases as the income of the individual increses, for example if the income of the individual is $100,000 then the tax rate is 10% and if the individual income is $200,000 then the income tax will be 20%.

This is beneficial for the economy because this allows the government to maintain a healthy source of taxes without reducing the demand in the economy as after a point the the average rate of consumption falls in the market. This also help maintain equality in the market and poor can get the benefit without paying for it.