Most state and local income taxes are either… (insert big wrinkle response here).

Most state and local income taxes are either… (insert big wrinkle response here).

A. Progressive or flat

B. Regressive or flat

C. Progressive or regressive

Answer: C. Progressive or regressive

Most of the income taxes directly applied by states and municipalities tend to be either progressive or regressive. A system of progressive taxation implies the highest tax rate at the post of the highest incomes and vice versa, that is, a person with low incomes pays a higher tax rate, than it is done to a person with a higher income. What this implies is that the fact that, the higher the income, the higher the burden of tax implies progressivity tax, and the tax burden decrease because the tax decreases as income rises as for regressive tax.

State and local income taxes that have such a progressive nature would bring about a situation where higher income earners would be paying a larger share of their income as a tax while lower income individuals would be paying a smaller share. These taxes are neutral in terms of income, where rich or poor pay the same proportional amount of tax. Otherwise, the taxes can be regressive, when lower-income groups ends up giving more of percentage of their total income than higher-income groups. The structure of the tax system defines if it is progressive or regressive in nature. The more progressive the tax system, the more proportionately it taxes the wealthy and the less it taxes the poor .