Marginal Tax Rates In The United States

1100 Words5 Pages
Imagine a friend says that he doesn’t want to take a job that pays slightly more money only because he will be bumped into the next tax bracket and end up taking home less income after taxes. Based on the video Engager you watched in Unit 2, how would you advise this friend? Define marginal tax rates. Then, explain why tax rates in the United States were designed to be marginal. If I had a friend with this dilemma I would better inform him about our tax laws. I would explain to him that our government uses marginal tax rates. This means that although you will be jumped into the higher bracket and get taxed a higher precent, you will pay the higher tax percent on only the income you earn after each tax bracket. The government created marginal…show more content…
Regressive tax rate is a tax rate that people with lower income pay the highest percent of their income in taxes. Flat tax rate is a tax rate that all income levels pay the same percent of their income on taxes. And last, progressive tax rates is a tax rate where people with high income pay the highest percent of their income in taxes. Sales tax is considered to be regressive because people with lower income spend a higher percent of their income on good and services compared to higher income individuals, therefor the lower income individual is getting taxed a higher percent of his/her income. Income tax however is considered to be progressive because of marginal tax rates, which causes higher income individuals to be taxed at a higher percent the more they earn. Thus making higher income individuals pay the highest percent of their income to taxes. Texas is considered to have a regressive tax system. I believed that Texas should adopt an income tax to make the system less regressive because lower income individuals are already living on a tight budget and need some relief. If a family is already spending most of their income on goods, getting taxed at a higher precent leaves them with no extra money to invest and have finical gain. This creates a financial cycle that is hard to get out of. Compared to higher income families with more disposable money to spare on higher taxes(income…show more content…
Explain the positive aspects of this government involvement. Now, explain the negative aspects of government involvement. Finally, describe to what extent you believe the government should be involved in the economy, and why. The government can affect economic activity with taxation and sending, otherwise known as Fiscal Policy. They can raise taxes to increase revenue for the Government which taxes money out of the economy, or they can spend money which puts money back into the economy. Forms of spending include but not limited to; social security, welfare, and cooperate bailouts. This positive aspect of Government involvement reduces poverty and the overall economy. Another perk of government involvement in the economy can be seen through job creation and minimum wage. Job creation can be done in many ways, but the main way is through public work projects such as highways and railroads. However public projects come at a cost…. a cost that must be covered by an increase in taxes. Government involvement has its perks but also negative aspects When the government gets involved in the economy they have nothing but the best intentions in mind however some solutions interfere with the naturally occurring business cycle and negatively effect the economy. A reasons for this is because there is not one set, solution that can solve the economies problem while pleasing every.

More about Marginal Tax Rates In The United States

Open Document