The U.S. Tax structure consists of:
- Progressive taxation at the federal level and proportional taxation at the state level.
Explanation:
1. Progressive taxation means that individuals with higher incomes pay a higher percentage of their income in taxes compared to those with lower incomes.
2. At the federal level in the U.S., the tax system follows a progressive structure where tax rates increase as income levels rise. This is intended to promote fairness and redistribute wealth.
3. On the other hand, proportional taxation, also known as a flat tax, applies the same tax rate to all taxpayers regardless of income level. Some states in the U.S. have adopted this type of tax system, where everyone pays the same percentage of their income in taxes.
4. Therefore, the U.S. tax structure combines progressive taxation at the federal level to ensure the wealthy pay a higher share of their income in taxes, while some states implement a proportional tax system with a uniform tax rate for all residents.