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Regressive Taxation: Tax Revenue Sources

This document discusses different types of taxation systems: - Regressive taxation requires lower-income individuals to pay a higher percentage of their income in taxes compared to higher-income individuals who pay the same tax rate. - Progressive taxation imposes higher tax rates on higher incomes so that the tax burden is distributed based on ability to pay. - Tax revenue comes from sales, income, and property taxes with income taxes being a major source of state revenue and property taxes funding local governments. - Arguments for regressive taxation include higher-income individuals having more to invest and save, boosting the economy. Arguments for progressive taxation include only taxing individuals based on ability to pay without overburdening low incomes.

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92 views3 pages

Regressive Taxation: Tax Revenue Sources

This document discusses different types of taxation systems: - Regressive taxation requires lower-income individuals to pay a higher percentage of their income in taxes compared to higher-income individuals who pay the same tax rate. - Progressive taxation imposes higher tax rates on higher incomes so that the tax burden is distributed based on ability to pay. - Tax revenue comes from sales, income, and property taxes with income taxes being a major source of state revenue and property taxes funding local governments. - Arguments for regressive taxation include higher-income individuals having more to invest and save, boosting the economy. Arguments for progressive taxation include only taxing individuals based on ability to pay without overburdening low incomes.

Uploaded by

Abubakar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Regressive Taxation

Regressive taxes hold a great impact on people having lower income than the ones having high.
In this system both wealthy and average person pays the same tax rate.
This tax isn’t based on ability of persons to pay.
Example: Suppose two individuals purchases clothing of $200 per week and they pay $7 on
their purchases each. One person earns $2000 in a week whereas the other one earns $320.
Due to fixed tax the one would be paying 0.35% and the other one would be paying 3.3% of his
income.
So, despite of the same tax rate the one with lower income pays a high tax percentage of his
income, this makes the tax regressive.

Progressive Taxation
Progressive taxation is opposite to the Regressive. In this system, the taxes imposed on high
income individuals is higher than the ones with lower income. The people having less income
pays the less tax.
For Example: in federal income tax, there are different brackets for the income tax payers, high
income people pays the high percentage of their income, This ranges from 10%( (low-income
people) to 39.6% (high-income people).

Tax revenue sources:


The state collects the revenue taxes from these primary three sources; sales, income and
property taxes. The individual’s income tax is the brightest source of revenue generation for the
state. Whereas property taxes benefit the local government for revenue increase.
Tax revenue oscillates when economic condition changes.
The state taxation system is progressive as it burdens the high-income people with more tax
than the ones with lower-income.

Why one should support Regressive tax system?


When the people earning high pays less tax, they have more non-compulsory funds to utilize for
the investments and savings. The investments that wealthy people make, in result they earn
more income that is referred to the income tax.
Why one should support Progressive tax system?
The progressive tax system only burdens the persons who can afford to pay them, this system
doesn’t imply high taxes on the low-wage income earners.

QUESTION NUMBER 2:
GENERAL-LAW CITY
In this type of city, the structures of government and powers are determined by
the laws of its STATE. In this type, no charter is possessed locally, all the rights are
granted by the STATE GOVERNMENT.

Strength and weakness


In General law city the Rights of citizens are reserved by the STATE. As rules
implies directly by the STATE, so there is less possibility of misconducting by the
local officers on high posts.
Weakness is that, regulations implemented by the STATE may not be suitable for
some regions.

HOME RULE
On the other hand, a HOME RULE city can pass any rule or regulation it feels
necessary to keep things in order, until the STATE law restricts it.
To make a city HOME RULE, the city population must reach 5000 and an election
has to be held for sanctioning a city charter.

Strength and Weakness


The locals of a home rule city have their rights to choose municipal government.
They have authority to choose terms for the council members office, election
procedure of the Mayor, establishing of more commissions and boards which
they feel necessary for functioning of the city.
The weakness includes, due to separate charter home rule makes its hard to
communicate with neighboring local governments on issues that affects the wide
region.

Under the HOME RULE, a local government can adopt any form of government;
commission or aldermanic.

COMISSION-CITY FORM:
In this form, the voters elect the mayor and 4 other members as the Council. After
elections, a meeting is held and council refers members to be commissioner of
public health, Accounts and safety.
The Mayor holds office of public affair commission.

ALDERMANIC-CITY FORM:
In this type the Mayor acts as the chief executive officer of the municipality and is
elected for four years along with city clerk and city treasurer.

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