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State And Local Politics In Massachusetts Term Paper

¶ … taxes and their implementation in various states. It will highlight the different tax philosophies of progressive as well as regressive tax and what are the various examples of each type of tax. This paper will also justify the local property tax and its necessity in towns and cities. State and local policies in Massachusetts

Introduction tax is a fee charged by a government on a product, income or activity. It is a charge imposed by the government on people, entities, or on property in order to raise revenue. If tax is levied directly on personal or corporate income, then it is a direct tax. If tax is levied on the price of a good or service, then it is called an indirect tax. The purpose of taxation is to finance government expenditure. One of the most important uses of taxes is to finance public goods and services, such as street lighting and street cleaning. Since public goods and services do not allow a non-payer of tax to be excluded, or allow segregation by a consumer, there cannot be a market in the good or service, and so the market needs to be provided by the government or a quasi-government agency with funds, which tend to finance themselves largely through taxes.

Progressives Tax progressive tax, or graduated tax, is a tax that is larger as a percentage of income for those with larger incomes. It is the tax that takes a larger percentage from the income of high-income people than it does from low-income people. Most income taxes are considered progressive in nature. This tax is usually applied in reference to income taxes, where people with more income pay a higher percentage of it in taxes. The term progressive refers to the way the rate progresses from low to high, but over time it has become confused with modern.

A progressive tax system is that people with higher income tend to have a higher percentage of that in disposable income, and can afford a greater tax burden. A person making exactly enough money to pay for food and housing cannot afford to pay any taxes without it causing material damage to himself, while someone making twice as much can afford to pay up to half their income to taxes.

For example, in the United States there are six "tax brackets" that are used to...

These percentages in 2003 and 2004 are:
35%: $321,201 and up

If an individual's yearly income falls within a particular tax bracket, they pay the listed percentage of their income on each dollar that falls within that monetary range.

Regressive Tax

Regressive tax is a tax that takes a larger percentage from the income of low-income people than the income of high-income people. A regressive tax is a tax which takes a larger percentage of income from people whose income is low. A tax which places proportionality more of a burden on those with lower incomes. This Tax is such that the higher the income of the taxpayer the smaller the proportion or percentage paid in that tax. This contrasts with progressive taxes where the proportion paid rises as income increases, and proportional taxes where the proportion paid remains the same at all levels of income.

Examples of regressive taxes include:

Value added tax or other sales tax on groceries. Since food is a basic necessity, it takes up a much higher percentage of the budget of a person or family with a lower income.

The poll tax which is a fixed tax for each person: since each person pays the same amount, it is a lower proportion of people with higher incomes.

Gas tax

Cigarette tax.

The lottery tax is regressive. It takes a higher percentage of a poor man's wages than a rich man's. Every study has shown this to be the case and there has not been one published study that contradicts this finding. But that is not all: the lottery is also played more often by poor people and is therefore a highly regressive tax.

Progressive vs. Regressive Tax

Progressive & Regressive taxes describe the tax table, not a political opinion.

Most often these are called progressive or regressive tax tables or taxes. In a progressive tax, the more you earn, the higher your tax rate. In a regressive tax, the less you earn, the higher your tax rate. The classical progressive tax is income tax. The classical regressive tax is sales tax. In a progressive tax, the more you earn,…

Sources used in this document:
References

Gilbert E. Metcalf, The National Sales Tax: Who Bears the Burden, last viewed: 13 thMay'04 http://www.cato.org/pubs/pas/pa-289.html

Investopedia, last viewed: 13th May'04

http://www.free-market.info/main0211/messages/481621716.html

Richard garner, Regressive Taxation, last viewed: 13th May'04
http://www.free-market.info/main0211/messages/481621716.html
The Investors World, last viewed: 13th May'04 http://www.investorwords.com/3892/progressive_tax.html
Wikipedia, The Free Encyclopedia, last viewed: 13th May'04 http://en.wikipedia.org/wiki/Regressive_tax
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