Progressive Tax

Date: Thursday, September 4, 2008
Time: 7 PM
Place: DeVry Lab

A progressive tax exists if as income increases, the average tax rates increase. The Federal income tax works this way. If your household income is above a certain minimum level but is below a certain maximum level (a tax bracket) you might pay an average of 20 percent of your income in taxes. If your household income rises above that upper limit and falls into a higher bracket, your average tax rate might increase to 24 percent. A tax bracket is a range of income on which is applied a given marginal tax rate. The structure is designed so that the lowest incomes pay taxes at a much lower tax rate than the highest incomes.