E.4.5+Define+progressive,+proportional+and+regressive+taxation.



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//Focus Question: What is progressive, proportional and regressive taxation?//



 * Topics on the Page **
 * Progressive Taxation **
 * Proportional Taxation **
 * Regressive Taxation **
 * Proposals for Change **
 * **Millionaire Tax**
 * **Robin Hood Tax**
 * **Lotteries**


 * [|The 1 Percent Problem,] Joseph Stiglitz from Vanity Fair Magazine, May 2012 addresses the income inequality in American society.**

=//Progressive//= A taxation structure which progressively increases the percentage of a citizen's income (or wealth) which is paid in tax as income (or wealth) increases.
 * The consequence should be that the more well off are taxed at a higher rate than are the less well off.

Here is a lesson plan for teaching about Progressive Taxes: [|Progressive Taxes Lesson Plan]

[|16th Amendment to the Constitution]established the federal income tax. See also [|History of the U.S. income tax f]rom the Library of Congress.
 * ===Throughout the 1860s, 1870s, and 1880s, farmers formed such political organizations as the Grange, the Greenback Party, the National Farmers’ Alliance, and the People’s (Populist) Part who advocated for an income tex. ===

Supporters of the Occupy movement desire a tax system that is more progressive. Here is a graph showing rising income inequality:



Supporters of a Progressive tax argue that it would sharply reduce income inequality in the United States by raising the taxes on the wealthy.

**[|Check Your US Tax Rate for 2012--and Every Year Since 1913]**

= = =//Proportional//= A tax system in which the tax collected is in constant proportion to the income being taxed, i.e. as income rises so tax rises proportionately. [2]


 * A proportional tax is often referred to as a "flat tax" because every person pays the same percent of their income in taxes.
 * For example, a person earning $10 million a year and a person making $10 thousand a year would each pay the same percent of their income in taxes.
 * Say the tax rate was 5%. Both the person making $10 million and the individual making $10 thousand a year would pay 5% of their total income in taxes. The millionaire would pay more because the gross dollar figure being taxed would be larger, but everyone pays the same rate (4).

=//Regressive//=


 * Image below shows an 1887 advertising flier for the semi-annual Louisiana State Lottery drawing at New Orleans, 14 June. Artwork shows a boy and girl with coins and banknotes, presumably to symbolize the schoolchildren the lottery was advertised as benefiting. **



A tax structure which requires the more well-off to pay a lower percentage of their income (or wealth) in tax than a less well-off citizen.

Sales tax and the federal goods and services tax (GST) are of this type as these taxes remain constant regardless of one's income.

The consequence is that the more well-off citizen pays a smaller percentage of their income to cover the tax on a new refrigerator than does a less well-off person. [3]

Another example of a regressive tax would be the federal payroll tax which is capped at $97,500. If you earn more than this a year you do not pay a higher rate. A person paying at 90,000 would be paying a higher percentage of their income than a person earning $10 million because the tax is not a percentage, but a gross amount (4).

For an interesting history related to the image to the left, see the [|Wikipedia entry on the Louisiana State Lottery Company], the only legal lottery in the mid-19th century that was ended in 1907 after corruption charges against it. This was a different organization than the present day Louisiana Lottery Corporation.

For a list of lotteries operated by states, see [|Lottery Results]from USA.gov

Here is a lesson plan for teaching about Regressive Taxes: [|Regressive Tax Lesson Plan]

[|Presidential Tax Returns]includes the tax returns of American presidents from Richard Nixon to Barack Obama as well as those of Franklin Roosevelt and the 2010 presidential and vice-presidential candidates. Presidents began releasing tax returns in the 1970s.

Millionaire Tax Proposal
Everything You Need to Know about the Millionaire Tax Proposal in Massachusetts



**Robin Hood Tax Proposal**

 * Image to the right shows a scene from "Bold Robin Hood and His Outlaw Band: Their Famous Exploits in Sherwood Forest", 1912 **

Proposal for [|Robin Hood Tax] (also known as FTT or financial transactions tax) that would charge a small fee of less than half of one percent (0.03%) on Wall Street transactions.
 * [|Supporters include the AFL-CIO]
 * [|Opponents include the Tea Party]

For more, visit the [|website of Peter DeFazio,] a representative from Oregon who is one of the chief supporters of the idea in Congress.

Lotteries


What Are Your Odds of Winning the Lottery?
 * Odds for correctly choosing 6 numbers drawn are 1 in 13,983,816

4 Reasons Not to Buy a $700 Million Powerball Ticket (That Have Nothing To Do with the Crazy Odds), MarketWatch (August 23, 2017)
 * Lottery play in the United States is greatest among low-income groups
 * Men, African Americans, Native Americans, and those living in disadvantaged neighborhoods

Works Cited [1] @http://bitbucket.icaap.org/dict.pl?alpha=P [2] @http://www.accounting-dictionary.com/definition/proportional-taxation.html [3] @http://bitbucket.icaap.org/dict.pl?term=REGRESSIVE%20TAXATION [4] []