In a progressive tax system, how does the tax burden change as income increases?

Study for the SQA National 5 Economics Exam. Engage with flashcards and multiple choice questions, each featuring hints and comprehensive explanations. Prepare confidently for your exam!

In a progressive tax system, the tax burden increases as income rises. This means that individuals with higher incomes pay a larger percentage of their income in taxes compared to those with lower incomes. The structure of a progressive tax is designed to ensure that those who can afford to contribute more to government revenue do so, which helps to reduce income inequality.

As income increases, taxpayers may enter higher tax brackets, where the rate of taxation is higher for income earned above certain thresholds. This results in a greater share of income being taxed, leading to an overall increase in the tax burden for higher earners. The intention behind this approach is to provide a fairer redistribution of wealth in society, supporting public services and social programs that benefit everyone.

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