Which type of tax is defined as a tax that takes a larger percentage from high-income earners than from low-income earners?

A progressive tax is defined as a tax system where the tax rate increases as the taxable amount increases. This means that higher-income earners pay a larger percentage of their income in taxes compared to those with lower incomes. The rationale behind a progressive tax structure is based on the ability to pay principle, which suggests that those who are able to pay more should contribute a larger share towards public goods and services.

In practice, a progressive tax system is designed to reduce income inequality by ensuring that wealthier individuals contribute more to financing government services and programs. For example, in many countries, this type of tax is commonly applied through income taxes, where rates increase at certain income thresholds, effectively placing a larger burden on those who can most afford it.

Understanding this concept is essential for grasping various tax policies and their implications on income distribution and social equity. In contrast, other types of taxes, such as regressive, proportional, or flat taxes, do not follow this structure and can lead to different economic outcomes.