Which tax takes a higher proportion of income in tax as income increases?

The concept of a progressive tax system is designed so that the tax rate increases as the taxable amount increases. This means that individuals with higher incomes pay a larger percentage of their income in taxes compared to those with lower incomes. In a progressive tax structure, the additional income earned is taxed at higher rates, which effectively results in wealthier individuals contributing more to the tax system as their income rises.

Such a system is often intended to promote equity, ensuring that those who can afford to pay more do so, thereby providing funding for public services and social programs that benefit the society as a whole. This contrasts with other forms of taxation where the rate remains constant regardless of income level, such as a proportional tax, or decreases for higher incomes, as seen in regressive taxes.

A regressive tax, for instance, takes a larger percentage from low-income earners compared to high-income earners, effectively straining lower-income households disproportionately. In contrast, a proportional tax applies the same tax rate across all income levels, meaning it does not adjust based on the taxpayer's income. Capital gains tax typically taxes profits made from investments, and while it may also affect income distribution, it does not increase the proportion of tax paid as personal income increases in the same