What Is A Progressive Tax System?

1066 Words Dec 11th, 2015 5 Pages
1. What is a progressive tax system? How does it differ from a regressive tax system?

In a progressive tax system, you pay a higher percentage rate as your income/wealth increases. As your income/wealth increases, so to does the percentage you must pay. A regressive system is the reverse, with individuals of lower income/wealth paying a higher percentage rate than those with higher income/wealth. There is an inverse relationship between percentage rate and income/wealth. As one decreases, the other increases.

2. What is gross income? What types of income are included in gross income?

Gross income is all income from all sources, whether taxable or non-taxable, before any deductions for business expenses, or adjustments, exemptions, or other deductions.1. WIth a Series EE bond, the person has the option to include the interest every year, starting with the first year, or to wait until the bond is redeemed or stops earning interest. Once the decision is made, it cannot be changed. If she included interest from this bond, ever, then she must continue to do so. If she received interest from it in any earlier year and did not include it for that year, then she cannot include any until she redeems the bond or it stops earning interest.

2. Interest from bonds from cities in the U.S. is usually tax-exempt, but must be included on the form anyway. There is a special line on the tax form for tax-exempt interest.

3. Money made by selling a bond most be reported on Schedule D.…
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