Progressive Tax Essay

In the United States, we have a tax system known as a progressive tax system. In a progressive tax system, the amount of tax is based on the income of the individual. That is, wealthier individuals pay a higher tax than someone with low income. Still, some people believe a flat tax rate, similar to Europe’s tax system, would be more beneficial. As the name suggests, a flat tax means everyone’s income would be taxed an equal rate regardless of status. I believe the United States should stay with a progressive tax because it will generate more revenue for the government and reduce income inequality.

Taxes are a significant source of revenue for government. Currently, the more an individual makes, the bigger the cut the government takes. If, for

The Gini Index is the most commonly used tool to measure income inequality. On a scale where 0 means perfect equality and 100 being perfect inequality, the United States was found to have a 41.1. Michael Linden in his article How Federal Tax Policy Changes Have Affected and Will Affect Income Inequality clarifies how the Gini index “does not have an intuitive meaning for most people. Saying that the average household among the richest 1 percent of households takes home nearly 30 times as much as the average household among the middle 20 percent, however, may be a clearer way of expressing the same thought.” To combat this inequality, the tax rate must correlate with the income of an individual. If a wealthy individual pays a higher tax, then there post-tax income would more closely resemble that of a lower income individual who pays a lower tax. Obviously, they would not be completely equal, but they would be closer than they would be without the progressive tax. As co-founder of Microsoft, Bill Gates, states in his article Why Inequality Matters , “High levels of inequality are a problem—messing up economic incentives, tilting democracies in favor of powerful interests, and undercutting the ideal that all people are created equal.” Keeping with the progressive tax is the first step in resolving income