These companies have no assets or income of their own and hence cannot pay taxes. They are only fictional entities that have been created for legal purposes. This is because companies themselves can pay no taxes.

There are several economists who argue that corporate tax can only be classified as progressive or regressive based on the company that it is being levied upon. These theorists believe that corporate taxes are actually proportional. There are many who argue that people who work in many of these high rates organizations can be included in the high-income groups, and hence the tax would still be progressive even it comes out of taxes.įinally, there are still others who believe that corporate taxes are paid equally by the workers in the form of reduced wages and the owners in the form of reduced capital gains. Hence, it falls on the lower sections of society. Their belief is that the money paid out as taxes actually reduces the wages of the people working in the organizations. However, there are others who believe that corporate tax is regressive. This is because they believe that corporate taxes are paid primarily out of the capital gains, which accrue to the organization. There are many experts who believe corporate taxes are progressive. However, expert opinions vary widely on the degree of the actual progressiveness of these taxes. Are Corporate Taxes Progressive?Ĭorporate taxes have been levied on the pretext of being progressive. Taxes on groceries are considered to be regressive in nature since these items form a large proportion of the household budget of a poor person. Regressive: Similarly, a tax is called regressive when it collects a larger portion of the income from the lower-income groups.

Proportional: A tax is called proportional when it is paid equally by all sections of the society.

For instance, income tax increases as the income go up.

Progressive: A tax is called a progressive when a larger portion is collected from the higher income groups.

However, before that, we need to understand the different types of taxes. In this article, we will have a closer look at this issue. However, many critics believe that it is not so. The corporate tax has been levied on the premise that it is a progressive tax. Taxes that help the government do the same are called progressive taxes. The purpose of taxation is to redistribute wealth from the rich to the poor. Taxes can be classified based on which class of the population pays the most.

Progressive regressive and flat taxes