The principle that taxes should be levied based on the taxpayer's ability to pay, suggesting that as income or wealth increases, the marginal utility decreases, allowing for higher tax rates on higher income tiers.
Income redistribution refers to the manner in which personal income is spent across different classes in society. It involves programs and policies aimed at reducing income inequality by shifting wealth from the richer segments of society to the poorer segments.
The marginal rate of tax represents the amount of extra tax that a taxpayer incurs if they earn one additional unit of currency over their current income. This rate typically rises as incomes increase under a progressive tax regime.
The marginal tax rate is the tax rate applied to an additional dollar of income, influenced by the progressive nature of income tax systems.
A Progressive Tax is a tax mechanism where the tax rate increases as the tax base increases. This kind of tax structure aims to distribute the tax burden more equitably based on the taxpayer's ability to pay.
