Final answer:
A graduated income tax is a progressive tax system where the tax rate increases as income level increases. It aims to distribute the tax burden more equitably, with higher earners paying a higher percentage of their income in taxes.
Step-by-step explanation:
A graduated income tax is a type of tax system where the tax rate increases as the income level increases. It is a progressive tax structure that aims to distribute the tax burden more equitably, with higher earners paying a higher percentage of their income in taxes. This system is used by many countries around the world, including the United States.
For example, let's say there are three income brackets: $0-$50,000, $50,001-$100,000, and $100,001 and above. The tax rate for the first bracket might be 10%, the second bracket might be 20%, and the third bracket might be 30%. This means that someone earning $60,000 would pay 10% on the first $50,000 ($5,000) and 20% on the remaining $10,000 ($2,000), for a total tax of $7,000.
The purpose of a graduated income tax is to create a more progressive tax system, where those who earn more money pay a higher percentage of their income in taxes. This helps to redistribute wealth and reduce income inequality.
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