In: Business and Management

Submitted By katem4823
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Tax is a levy or a financial charge that the government imposes on taxpayers, which may be an individual or a legal entity. If a taxpayer evades paying tax, then he can face punishment in the court of law. There are three charging tax system methods that the government uses to levy taxes; these are the progressive method, the regressive method and the progressive method. The proportional system charges a constant rate regardless the amount of salary a person earns. The regressive tax is whereby the income of an individual goes up, and the tax to pay decreases, while as in the progressive taxpayer.
If congress approves a new tax that will fund scientific research to find an alternative fuel sources, and everyone pays $200, then this is the proportional tax that is same as the flat tax. The system is deducting everyone $200 regardless of their income status in that the rich and the poor all contribute a fixed charge. In this project, the proportional tax system is the best method to fund this project. In the consideration, in a benefit principle point of view, the poor benefit much on the government operations like the ongoing scientific research, and so they are to pay accordingly.
More so the rich in the economic growth and investment perspective, the rich with more income will invest in the capital goods. Investments and in this case, capital goods stimulate and promotes growth in the economy; thus, this benefits all members in the society. So the rich are to pay fewer amounts of tax in order to invest their money for the best of all in the society. According to the internal revenue service people consider proportional tax regressive; this is because the burden of paying the tax from the poor is heavier than that of the rich. It is so as a large proportion of the tax comes from the poor.

References :

Econ Guru (2009). Taxation systems: progressive,…...

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