whereby the rich
pay a higher percentage than the poor
is considered progressive
. The US income tax system
, for example, is progressive in the sense that, as your income increases, so does the amount if that income
that's taxed. There are currently five marginal tax brackets
in the US: 15%, 28%, 31%, 36%, and 39.6%. In 1999, single taxpayers
whose income was lower than $25,750 had all of their earnings in the 15% bracket, while someone who earned $30,000 was taxed at 15% for the first $25,570 and 28% on the amount over that.
In practical terms, this system means that the rich pay almost all of the income tax collected. The Congressional Budget Office (CBO) reports that, for 1999, taxpayers earning more than $120,000 (the top 20% of US households in earnings) paid 77% of the total federal income-tax receipts. The top 40% (about $50,000 per year and up) paid a combined 93% of all income tax. Interestingly (due to the earned income tax credit) the lowest 20% of earners actually received money totalling 2% of the overall tax revenues.
Of course, these percentages are due to the fact that the rich and middle class pay tax bills that are large in absolute terms. For example, 10% of $1 million is $100,000, while 10% of $10,000 is only $1,000.
Social Security (FICA) taxes are a good example of a "regressive" tax, in which the rich actually pay a lower percentage of their incomes than poorer workers. For 2000, only wages up to $75,600 (the taxable wage base) are taxed, so if you earn more than this amount, you wind up paying a lower percentage of income. Of course, the tradeoff here is that there's a fixed maximum benefit for Social Security at retirement--you pay less, but you get lower benefits.