Final answer:
The term needed to fill in the blank is 'marginal tax rate', which is the rate applied to each additional unit of income within a tax bracket. In progressive tax systems, such as that of the U.S., this rate increases as individuals earn more, applying only to income above the threshold of the previous tax bracket.
Step-by-step explanation:
A marginal tax rate is the rate at which tax is paid on each additional unit of taxable income within a given tax bracket. In a progressive taxation system, as an individual's income increases, the tax rate on the marginal income earned rises as well. This means when an individual moves into a higher tax bracket, they pay a higher marginal tax rate only on the income that exceeds the threshold of the previous tax bracket, not on their entire income.
For instance, using the 2023 U.S. tax rates, if a single person earns $15,000 a year, the first $11,000 would be taxed at 10%, and only the additional $4,000 is taxed at the higher rate of 12%. Progressive taxes intend to tax higher incomes at higher rates, thus those who earn more will pay a greater percentage of their income in taxes, reflecting the ability-to-pay principle.