For persons who are payers of mandatory contributions to the budget, a proportional, regressive, progressive tax may be established. This division is based on the ratio between the rate and the object of taxation.
Progressive tax is a deduction, the rate on which rises in the course of an increase in the object of taxation. When used, the burden is more concerned with rich people. Under the proportional system, the rate remains unchanged. It does not depend on the size of the object of taxation. Progressive and proportional tax, therefore, are opposite to each other. Many economists are opponents of the flat rate introduced in the Russian Federation for individuals.
Progressive tax in Russia
The Russian government does not plan to introduce this system. At the state level, it is considered optimal to maintain the rate of 13%. This was stated in one of his reports by Dmitry Medvedev. The idea of introducing a progressive income tax in the country was discussed, but did not receive support. In the coming years, as stated by the Prime Minister, the system of taxation of natural persons will not be revised. This position was supported by the president of the country. The current scale of personal income tax introduced in 2000. According to Ivan Solovyov, an expert at the Institute of Legislation and Comparative Law, such a system ensures optimal collection of deductions. In particular, in 2010, the budget received 1789.6 billion rubles. from personal income tax, in 2013 - 2497.8 billion. In addition, as the expert notes, the share of income tax in the total budget revenues from taxation also increases. So, in 2010 it was 39%, and in 2013 it was already 41.9%. In addition, the current system for the payment of personal income tax almost completely eliminated from the practice of "gray salary." In confirming the correctness of the choice, experts say that the world does not welcome breaking effective schemes for budget allocations. This is due to the fact that any changes can destroy the established model, as well as significantly reduce the confidence of tax payers. Dmitry Medvedev, however, saying that the system will not be revised in the near future, did not rule out that the Government could return to discussing the issue in 5-7 years. Experts themselves say that now is not an appropriate time for discussions on the issue.
Progressive income tax actually entered into practice as a result of the class struggle. Farmers and representatives of the working class had a special influence on its implementation. The confrontation that lasted for many decades, in which one or the other side was victorious, numerous attempts to reform the existing taxation systems, a complex of social and economic factors, eventually gave the desired result. Progressive taxation, therefore, was realized in practice in the form of income tax.
Use of the system by different countries
Simple bitwise system
It is considered the simplest form in which progressive tax can be charged. In this model, the tax base is divided by categories. Each of them correspond to higher and lower levels of income. A fixed amount of deductions is also set for one or another category. Such a system was used in many countries at the initial stage of the introduction of income tax.
It also uses the division into categories. For each category provides its own interest rate. Within the category is maintained proportional scheme. When you go to the next level, the amount jumps. When using such a model, a situation may arise when the payer with a higher income will have less funds than citizens with lower incomes.
Single stage system
In this model, only one bet is used. At the same time, a limit is introduced below which income is not subject to taxation. Above the set limit, accrual occurs regardless of subsequent growth. The rate itself is not progressive and fixed. However, given the limit, there is a real increase with an increase in income.
With this system, the payer's income is divided into parts. Each step is characterized by its own fixed rate. The increase occurs with an increase in taxable income at each step. Their number can be minimal (two - in Poland) or maximum (18 - in Luxembourg). As a feature in such a system, there is the fact that the tax rate is imputed not relative to the entire income, but to the part of it that exceeds the limit of one or another level. As a result, the amount of all deductions for each level will be presented for payment.
Pros and cons of a multistage model
The advantages include:
- Visibility - the entire system can be represented as a simple table.
- Simplicity - any payer can make their own calculations.
- Flexibility - at each stage separately, for each subject you can change the rate.
- Indexation of non-taxable income (if present).
Among the shortcomings worth noting:
- Greater complexity in comparison with the proportional system.
- In the case of indexation of income, including non-taxable, it is necessary to raise rates or expand the limits of steps.
In this case, the rate rises without jumps. Due to its uniform increase, the base becomes larger, too smoothly. Usually in a linear multistage system, the maximum rate exceeds the initial rate several times. This leads to the fact that the increase in the effective base within low incomes is much slower than when using the single-stage model of taxation.