Question

What is meant by a progressive tax system? Give an example.

Answer 1

A progressive tax imposes a higher rate on the rich than on the poor. It's based on the taxpayer's income or wealth. It's done to help lower-income families pay for basics like shelter, food, and transportation.
A progressive tax allows them to spend a larger share of their incomes on the cost of living expenses.
A progressive tax imposes a greater tax rate on higher-income brackets. Progressive taxation improves the poor’s purchasing power. In doing so, it redistributes income and stimulates the economy.
Examples of progressive taxes are income taxes, Obamacare taxes, estate taxes, and earned income tax credits.