Introduction
In Atlanta, tax payments consist of federal income, sales, and property taxes. These taxes can be assessed in terms of progressivity or regressivity. To understand the progressivity or regressivity of taxes, it is necessary to recognize the concept of a progressive tax.
A progressive tax is one in which individuals with higher incomes pay a higher percentage of their income in taxes. Regressivity means that the lower a person’s income, the higher their tax rate. Progressivity or regressivity depends on the threshold principle, and the order of evaluation can be traced.
Progressivity and Regressivity of Major Taxes in Atlanta
The federal income tax is the most progressive of the three taxes in Atlanta. This tax is applied on a progressive basis. Taxpayers pay taxes based on their income. The higher the income, the greater the tax liability. The tax employs a progressive rate system (Lee & Butler, 2022). Taxpayers pay a higher percentage of tax on high-income income, and the higher the income, the lower the tax percentage.
Although Atlanta’s sales tax is not as progressive as the federal income tax, it still increases with the ability to pay. Sales tax is charged depending on the purchase amount. The higher the purchase amount, the greater the tax liability. The same percentage of tax is paid regardless of the purchase amount. This tax does not have a progressive tax scale. Thus, the least progressive in this case will be the property tax.
Property tax is levied based on the estimated value of the property (Lee & Butler, 2022). Taxpayers pay the same percentage of tax regardless of the property’s size. This tax does not have a progressive taxation scale, making it the least progressive of the three.
Conclusion
In conclusion, in order of progressivity or regressivity, federal income tax, sales tax, and property tax are distinguished among the significant taxes in Atlanta. The federal income tax system is the most heavily weighted toward higher earners, while the property tax is the least progressive. The federal income tax is based on an individual’s income, while the property tax is not. The sales tax is in the middle because it is progressive in some states, and in others, it is regressive.
Reference
Lee, H., & Butler, J. S. (2022). The Determinants of Tax-Based Incentives: An Empirical Analysis of State Governments. Public Performance & Management Review, 45(6), 1431–1460. Web.