Flat tax vs progressive tax9/12/2023 If this individual wants to work extra hours or take a second job, they would end up facing the 22 percent rate on their additional earnings. 2022 Federal Income Tax Rates and Brackets for Single Filers, Married Couples Filing Jointly, and Heads of Households Tax Rateįor Married Individuals Filing Joint ReturnsĪs an example of how marginal tax rates affect decision making, take an individual earning $41,775 in taxable income, meaning much of their income is taxed at the 12 percent rate. For single filers in 2022, the first $10,275 in taxable income is taxed at a rate of 10 percent, the next $31,500 is taxed at a rate of 12 percent, the next $47,300 is taxed at a rate of 22 percent, and so on. federal individual income tax has a graduated-rate structure with seven tax brackets and rates ranging from 10 to 37 percent. As a result, compared to single-rate taxes, graduated-rate taxes are usually more harmful to economic growth, especially when the variation among rates is large and the top rate is high. This reduces the payoff to additional work and investment on the margin and acts as a negative incentive on working more. Unlike single-rate or “ flat” income taxes, graduated-rate or “progressive” income taxes impose higher marginal tax rates on higher levels of marginal income. Graduated-Rate “Progressive” Income Taxes
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