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Old Tuesday, May 09, 2017
kaka88 kaka88 is offline
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Quote:
Originally Posted by hmkashif View Post
2) Progressive tax:
• It is a tax in which the tax rate increases as the income increases.
• A progressive tax takes a larger percentage of income in taxes from the high-income group than it does from the low-income group.
• Under progressive taxes, the lowest income group including ones below the poverty level would pay little to nothing in taxes.
3) Regressive tax:
• It is a tax imposed in such a manner that the tax rate decreases as the amount of taxable income increases.
• The higher income group pays less in taxes than the lower income group.
• Regressive taxes impose greater tax burden on the poor relative to the rich.
• In case of regressive taxes there is an inverse relationship between the tax rate and the taxpayer's ability to pay.
• People with low income and low ability to pay, will pay higher taxes.
• This means that it hits lower-income individuals harder.
• Sales tax on food, clothing and transportation can be regressive.
• Since each person pays the same amount of money, it is a lower proportion for people with higher incomes
• Tobacco and gasoline taxes are highly regressive.
Example:
• If a person with 50 dollar income pays 5 dollars in gasoline tax, it is 10% of his income in taxes.
• But the person making 500 dollars, paying 5 dollars in gas taxes is only paying 1% of his income in this tax.
• Hence it is regressive.
• Sales taxes on essentials like food, clothing and housing make up a higher percentage of a lower income persons budget.
• In this case, even though the tax may be uniform (such as 7% sales tax in the state of Georgia), the lower income group is more affected by it because they are less able to afford the tax.
• Lotteries are also regressive by nature.
1) Proportional tax:
• It is a tax where the rate of taxation is fixed
• The amount of the tax is a fixed proportion (say 20%) of one's income
• It stays a fixed irrespective of how high or low the income is
For example:
• A 10% proportional tax would mean that one making 100 dollars pays 10% or 10 dollars in taxes, while someone making 500,000 dollars pays 50,000 dollars in taxes.
Please continue sharing relevant definitions, material, etc. Wonderful people contributing to a noble cause. Senior members in the likes of Sir Sammer are a blessing indeed. Could anyone of you confirm if Careem and Uber pay any sort of taxes (sales tax on services, Income Tax to FBR) as mentioned by Sir. Thank you
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