Nowadays, you need to have a clear understanding of the tax system, especially if you want to be a responsible citizen and have no problems with the government. This boardroom software has the necessary material that is advisable for you to know about the taxation system, proportional taxation system, regressive taxation system, progressive taxation system, average tax rate. So, let’s start.
The term taxations come from ancient civilizations, so you will have an overview of how the taxation system has evolved over the years. The taxation system is different from other payments, and it has varied according to the years and authorities. In most modern types of the taxation system, taxation happens in the physical assets and sales businesses. Exists three main types of taxation system: proportional taxation system, regressive taxation system, progressive taxation system.
A proportional taxation system is a type in which the tax authority collects the same tax rate from each taxpayer, regardless of income.
In other words, it doesn’t matter how much you earn you will pay the same tax as other people that are from different classes, so it is also called a flat tax. The proportional taxation system is based on the theory that every person is equal and should pay the same taxes. However, there are advantages and disadvantages to the proportional taxation system. People suggest that it is unfair to pay equally as the high-income earners should pay higher percentages as they earn more. The main advantage is that it is a fixed payment.
It means that applied equally, taking a higher percentage of income from low-income earners than from high-income earners. Below you will see the types of the regressive taxation system.
And finally, a progressive taxation system. It is based on the ability to pay taxes. The progressive taxation system has a lower tax rate on low-income earners than those who earn a higher income. They have groups where people are divided according to their abilities.
You should also know about the average tax rate. In general, it is the total amount of taxes that you will pay during the year. In order to have a clear understatement of the taxation system, you are advised to use this board of directors portal that can explain every topic in detail and provides also examples of explanation.