Term Paper: Taxes and Their Implementation

Pages: 5 (1497 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper


[. . .] The classical regressive tax is sales tax. In a progressive tax, the more you earn, the higher your tax rate. In a regressive tax, the less you earn, the higher your tax rate. Progressive taxes soak the rich, regressive taxes soak the poor. But there are many taxes and fees that are more extreme of each kind.

Combined with this tax theory, a great deal can be induced about economics and politics. As most people are involved in preparing their progressive federal income taxes it is fairly well understood.

And because most people are not involved in calculating their regressive taxes, it is fairly poorly understood.

All known functioning systems of taxation have a balance of progressive and regressive taxes

Property Tax of Cities & Towns

Property-tax rates expressed as percentages are usually small, in the United States they apply to capital values and are in fact much higher: The tax on buildings and property other than land alters reserve allotment where older property exists. New, high-quality buildings are taxed more heavily per unit of space than are older ones, including slums. There is no justification for this kind of tax; in the costs that the two types of property and their occupants impose on local government in terms of police, fire protection, etc. Thus the citizen's payment for the services of local government goes down, relatively, as the building he occupies gets worse, even though public expenses attributable to the property are unaffected or may even amplify. Cities that urgently need to replace obsolete buildings ironically base much of their investment upon a tax that encourages owners to hold on to depreciated structures and reprimand owners of new ones.

Every increase in the property-tax rates on structures reduces the popularity of putting capital funds into new buildings; it instead creates an encouragement against improvement of the quality by new construction, and discourages maintenance. It also leads to the construction of rooms, apartments, and buildings somewhat smaller than would be the case in the absence of tax.

Differences in effective tax rates among localities in cities and towns may have the effect of creating islands of relatively low tax rates. Some communities may have tax bases above average in relation to governmental commitment and can get by with lower tax rates. They attract capital. Some communities, perhaps by the use of zoning, exclude types of property linked with high governmental expenditure such as high-density housing, which brings many children and requires more schools. Tax rates elsewhere must then be higher. The subsistence of such enclaves will add to the financial imbalance of neighboring localities and emphasize the difficulties of older areas. Lower tax rates on the border of an urban area encourage sub-urbanization. Property nearer the center will be subject to high tax rates, aggravating the troubles of central-city business properties. High taxes on structures also favor horizontal over vertical growth of metropolitan areas.


Every citizen of every country is liable to pay some amount of money towards its government who in turn utilize that money for giving public facilities to the citizens. These are different kinds of taxes which are introduced by every government which they believe is necessary for the people. The two most apparent taxes, which are paid by the people of United Sates, include, progressive and regressive taxes. A progressive tax is defined as a tax whose rate increases as the payer's income increases. That is, individuals who earn high incomes have a greater proportion of their incomes taken to pay the tax. A regressive tax, on the other hand, is one whose rate increases as the payer's income decreases. The rationale is that individuals or families at the low end of the income spectrum spend a higher proportion of their income than those at the high end. Combined with the fact that sales tax is tied to consumption rather than income, this leads some to the conclusion that low-income individuals and families pay a greater proportion of their incomes in sales taxes, therefore sales tax is regressive.


Gilbert E. Metcalf, The National Sales Tax: Who Bears the Burden, last viewed: 13 thMay'04 http://www.cato.org/pubs/pas/pa-289.html

Investopedia, last viewed: 13th May'04


Richard garner, Regressive Taxation, last viewed: 13th May'04


The Investors World, last viewed: 13th May'04 http://www.investorwords.com/3892/progressive_tax.html

Wikipedia, The Free Encyclopedia, last viewed: 13th May'04 http://en.wikipedia.org/wiki/Regressive_tax [END OF PREVIEW]

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