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A Study on Progressive Income Tax a Case Study of Us & Brazil

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A STUDY ON PROGRESSIVE INCOME TAX
A CASE STUDY OF US & BRAZIL
________________________________________
INSTRUCTOR: DALIA EL-EDEL
ECON 310-02 TERM PAPER - BY: JIHAD MASHAMOUN 900-08-2910
LARA AZZAM 900-09-3033
LUJANE MULLA 900-10-1019 ABSTRACT There is no doubt that the widening income disparities were a major driving force fueling the recent uprisings within the Middle East. One solution that has been put forth for adoption is the progressive income tax. This paper intends to assess the theoretical bases and popular arguments surrounding this very dynamic topic. The first section provides a brief definition of progressive taxation in contrast with other forms of taxation. It also discusses the most dominant for and against arguments both from a theoretical and an empirical point of view. The second section provides a case study of progressive income taxes in a leading industrial and developed country; the US. The third section provides a comparative study from Brazil; an emerging economy that has recently adopted progressive taxation. Based on the theoretical analysis and the two case studies, the paper concludes by providing policy recommendations that should be implemented in order to complement progressive taxation and gain the best and most balanced results in terms of equality, efficiency and revenues. Finally taxation is only part of the economic equation; proper efficient tax system is only one step forward towards creating equal opportunities through proper government support programs. In order to achieve the best results out of progressive taxation, it has to be combined with extensive targeted government social and welfare programs. Also monitoring is needed for the efficient and purposeful expenditure of government revenue.

INTRODUCTION A progressive income tax rate is one in which the marginal tax rate

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