Progressive tax

A progressive tax is an income tax that mandates a proportionally higher tax on higher income levels. A progressive tax is being used whenever there are several tax brackets in a taxation system, where a lower tax rate is charged to lower-income people and a higher tax rate is charged to higher-income people. The effect of this system is to place a reduced burden on lower-income people in paying for the government. A progressive rate can also be built into other types of taxes. For example, a tax on luxury goods is essentially a progressive tax, since it is assumed that only higher-income people buy these goods.