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Degressive Tax for Dummies

noun


What does Degressive Tax really mean?

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Sure, let's break down "Degressive Tax" together. Okay, so the word "Degressive" means something that goes down or decreases over time, while "Tax" is the money we pay to the government for things like roads, schools, and other stuff. When we put them together, it means a tax where the rate decreases as the amount of income increases. It's like when you earn more money, you might have to pay a smaller percentage of it as tax.

So, let's say you and your friend both earned money from your lemonade stands. If you earned a lot more than your friend, a degressive tax would mean that you would have to pay a smaller percentage of your earnings as tax, compared to your friend. It's like your friend's tax rate would stay the same no matter how much money they made, but your tax rate would go down as you earned more.

In some places, they use degressive taxes to try and help people who earn less money. The idea is that people who have more money can afford to pay a smaller percentage of it as tax, while people who have less can get a break. It's like if you and your friend were buying movie tickets, and the person selling them says, "hey, if you earned more than your friend, you can pay a little less for your ticket."

So, that's basically what "Degressive Tax" means - it's a tax where the amount you have to pay goes down as you earn more money. Cool, huh?

Revised and Fact checked by Emily Davis on 2023-11-15 06:08:00

Degressive Tax In a sentece

Learn how to use Degressive Tax inside a sentece

  • In a degressive tax system, people with lower incomes pay a higher percentage of their income in taxes than those with higher incomes.
  • An example of a degressive tax is when someone who makes $20,000 a year pays 10% in taxes, while someone who makes $100,000 a year only pays 5% in taxes.
  • If the government implements a degressive tax, it means that the tax rate decreases as the income of the taxpayer increases.
  • In a country with a degressive tax policy, the government may use a lower tax rate for higher income brackets to encourage investment and economic growth.
  • Under a degressive tax system, those who earn less money may feel a greater burden from taxation compared to those who earn more money.

Degressive Tax Hypernyms

Words that are more generic than the original word.