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incomes. The cigarette taxes paid by low-income people represent a larger
share of their income than do the cigarette taxes paid by high-income
people and are thus regressive.
Proportional Tax
A proportional tax is one that takes a fixed percentage of income. Total
taxes rise as income rises, but taxes are equal to the same percentage no
matter what the level of income. Some people argue that the U.S. income
tax system should be changed into a flat tax system, a tax that would take
the same percentage of income from all taxpayers. Such a tax would be a
proportional tax.
Progressive Tax
A progressive tax is one that takes a higher percentage of income as
income rises. The federal income tax is an example of a progressive
tax. Table 15.1 "Federal Income Tax Brackets, 2007"shows federal income
tax rates for various brackets of income for a family of four in 2007. Such a
family paid no income tax at all if its income fell below $24,300. At higher
income levels, families faced a higher percentage tax rate. Any income over
$374,000, for example, was taxed at a rate of 35%. Whether or not to make
the tax system more progressive was a major debating point during the
U.S. presidential election of 2008.
Table 15.1 Federal Income Tax Brackets, 2007
2007 adjusted gross income
(family of four)
Personal income tax rate applied
to bracket
Less than $24,300
Zero (family may receive earned
Attributed to Libby Rittenberg and Timothy Tregarthen
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