Progressive Tax

A progressive tax levies higher taxes on those of greater means. The US income tax was once a very progressive tax. It remains a somewhat progressive tax, but deductions make it less progressive than the progressive tax bracket schedule suggests. Significantly, the philosophical rationale for a progressive tax is that the wealthy can and therefore should pay more, so in principle any progressive tax should be assessed on wealth. In practice, the progressive tax is generally based upon income. Some studies suggest that poor and middle class households typically pay greater percentages of net worth in taxes, suggesting anything but a progressive tax system. For instance, in his book The Millionaire Next Door, Thomas Stanley points out that many high net worth households pay a lower percentage of net worth in taxes than most other households. In 1999, billionaire Donald Trump suggested a truly progressive tax to pay off the national debt. His progressive tax proposal was a one-time 14.5% tax on net worth for everyone worth over $10 million.