graduated income tax

A graduated income tax, also known as a progressive tax, is a system where the tax rate increases as the taxable income increases. This means individuals with higher incomes pay a larger percentage of their income in taxes compared to those with lower incomes.123

The rationale behind this system is that income is the best indicator of a person's ability to contribute to government support. Progressive taxes are generally seen as reducing income inequality.341

Key features include:
* Tax Brackets: Income is divided into "chunks" or brackets, with each bracket taxed at a different, increasing rate.2
* Marginal Tax Rate: This is the rate applied to the last dollar earned. Only the income within a higher bracket is taxed at that higher rate, not the entire income.2
* Effective Tax Rate: This is the total tax paid divided by the total income, which will be lower than the highest marginal tax rate.2

While generally considered fairer, the complexity of deductions and credits can affect the overall progressivity of the tax.31