Final answer:
The current federal income tax system in the United States uses progressive taxation, where tax rates increase with higher income levels, with marginal tax rates for a single taxpayer ranging from 10% to 35%. The system is designed to tax higher earners at higher rates compared to those with lower incomes.
Step-by-step explanation:
Under the current system, federal income tax rates increase as a taxpayer's income goes up, which is known as a progressive tax system. In the United States, this means that as individuals earn more money, they not only pay more in taxes overall but also pay a higher percentage of their income in taxes. This system is structured so that tax rates rise through what are referred to as marginal tax rates. For example, a single taxpayer's income is taxed at marginal rates that range from 10% to 35%, depending on how much they earn. These rates apply to different income brackets, which are defined by specific income ranges.
In contrast to progressive taxation, other tax systems include proportional taxes, where the tax rate remains the same regardless of income level, and regressive taxes, where lower-income earners pay a higher percentage of their income in taxes than higher-income earners. Progressive taxation aims to achieve a degree of redistribution of wealth and is designed to place a lesser tax burden on individuals with lower ability to pay.
It should be noted that other countries may have even higher tax rates for their top income brackets. For instance, Sweden has been known to have top tax rates between 79% and 90% for the highest income earners.