Progressive tax
Definition
A tax is termed a progressive tax if the marginal tax rate (i.e., the rate of change of the tax to the quantity being taxed) is an increasing function of the quantity being taxed. In some cases, the marginal tax rate may be piecewise constant and increase in jumps at specific points; this is also termed a progressive tax.
Related notions
- Regressive tax
- Flat tax refers to a situation where the marginal tax rate is constant, and independent of the quantity being taxed (though the term is also used for a flat tax with a base exemption).